(a) the bank has unimpaired paid-up capital and surplus of at least $1,000,000. For purposes of this rule, "unimpaired paid-up capital and surplus" shall mean the aggregate of the bank's capital stock account(s) and its surplus account, as defined in 32-1-109 , MCA, minus any deficit balance existing after aggregating the bank's undivided profits account, profit and loss (or similar) account, capital reserve account(s) , valuation reserve account(s) , and allocated or specific reserve account(s) ; and

(b) the bank has received written approval from the department in response to the bank's written request to act as a reserve bank.

(2) In addition to maintaining a reserve in the amount required by Federal Reserve Board regulations, approved reserve banks shall maintain an additional reserve balance equal to at least 10% of bank deposits.

(3) The reserve shall be held in the form(s) and manner(s) established by Federal Reserve Board regulations, or deposits in a federal home loan bank in the district in which the bank is located.

(1) Under authority granted by 32-1-362 , MCA, the department hereby permits state banks of Montana to engage in the business of direct leasing of personal property under the following regulations:

(a) A bank may purchase personal property to be leased only after it has a valid and binding commitment from the prospective lessee to lease the specific property under terms acceptable to the bank.

(b) Lease agreements with any one lessee may not exceed 40% of the unimpaired capital and surplus of the bank. If the lessee is also a borrower from the bank this 40% must be reduced by the balance of loans to the lessee.

(c) Every lease agreement must provide for full payout to the bank of its full acquisition cost of the lease property during the initial term of the lease.

(d) Residual value of the property at the end of a lease agreement's original term may be considered by the bank to constitute partial recovery of its cost of acquisition if such residual value is not more than 25% of the cost of acquisition.

(e) No lease agreement shall extend for an initial period of more than ten years or the leased property's normal useful life, whichever is less, unless the bank receives from the department prior written approval of each lease agreement of longer term.

(f) Each lease agreement must include provisions whereby the lessee disclaims any liability of the bank for the condition of the leased property or its quality; and whereby the lessee assumes full responsibility for protection and maintenance of the leased property.

(2) Any formerly leased personal property returned to the bank by default, completion of the lease, or otherwise, must be disposed of by the bank by sale or lease within one year after gaining legal possession.

This rule has been repealed.

(1) The department invoices banks, investment companies, and trust companies for semiannual assessments every June and December. The assessment is based on each institution's total assets provided in its previous March and September call reports.

(2) The fee is calculated based on the total assets of the bank, investment company, or trust company multiplied by .0000375, plus the flat fee listed below.

Example: Bank A reports total assets of $58,873,000 x .0000375 plus $3,000 equals $5,207.74.

(3) The assessment is due 30 days after each invoice date, or July 31 and January 31, whichever is later.

(4) The fee shall not exceed $400,000 for each semiannual assessment.

(5) In the event of a merger between Montana state-chartered banks, investment companies, or trust companies during the second or fourth quarter of the year, the assessment fee for the acquired institution must be paid by the surviving institution.

This rule has been repealed.

(a) The department adopts the definition of bank service corporation defined by 12 USC 1861 as "a corporation organized to perform services authorized by this Act, all of the capital stock of which is owned by one or more insured banks."

(b) Services which may be provided by a bank service corporation include, but are not limited to:

(i) electronic data processing;

(ii) accounting services;

(iii) clearinghouse functions;

(iv) investment services for the account(s) of bank(s) ;

(v) advertising and marketing services;

(vi) communications services;

(vii) audit services;

(viii) loan review and collateral inspections;

(ix) retention of bank records, including data backup retention;

(x) safekeeping services, including vault and safe deposit box facilities;

(xi) courier services.

(2) As provided by 32-1-422 , MCA, a bank may invest in the stock of certain corporations. The investment in the stock of any approved corporation shall be limited to:

(a) the greater of 5% of a bank's unimpaired capital and surplus;

(b) the minimum number of shares necessary to participate in government sponsored enterprises; or

(c) the minimum dollar value of such shares necessary for the bank to participate in the services or programs. This limitation shall be exclusive of all accrued or declared stock dividends generated by such corporate stock.

(3) In addition to the Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, and the Federal Agricultural Mortgage Corporation, the department has determined that it is in the public interest for banks to be able to invest in the following corporations, subject to the restrictions listed above:

(a) federal home loan banks.

This rule has been repealed.

This rule has been repealed.

(a) "Capital" shall mean the aggregate of the bank's outstanding capital stock account(s) minus any deficit balance existing in an impaired surplus account.

(b) "Surplus" is defined in 32-1-109 , MCA. "Unimpaired surplus" shall mean surplus minus any deficit balance existing after aggregating the bank's undivided profits account, profit and loss (or similar) account, capital reserve account(s) , valuation reserve account(s) and allocated or specific reserve account(s) .

(2) Any loan to a managing officer, officer, director, employee or principal shareholder which was made before October 1, 1993, and which was in compliance with state law at the time, shall be considered legal throughout its term unless:

(a) the loan is renewed, or

(b) the terms of the loan are modified in any way, except for specified periodic interest rate adjustments, or

(c) security for the loan is changed in any way, except for substitutions or deletions agreed upon at the origination of the loan.

(i) If (a) , (b) or (c) occur on or after October 1, 1993, the loan shall be restructured to comply with the provisions of 32-1-465 and 32-1-467 , MCA, as amended.

(3) The following types of loans will not be included in the 2.5% of capital and unimpaired surplus aggregate loan limitation:

(a) loans or portions of loans guaranteed by a department, bureau, board, commission or establishment of the United States, including a corporation wholly owned, directly or indirectly, by the United States;

(b) loans or portions of loans guaranteed by or covered by a commitment or agreement to take over or purchase, issued by an agency or board of the state of Montana;

(c) loans or portions of loans sold without recourse to a federally insured depository institution;

(d) loans or portions of loans secured by pledged deposits in the lending bank.

This rule has been repealed.

(1) Records of customer accounts, as defined in (7), must be held in accordance with 32-1-491, MCA.

(2) The publication "Bank Record Retention Periods - Appendix A to ARM 2.59.111" (Appendix A) establishes the minimum period for retention of bank records other than those specified in 32-1-491, MCA. Appendix A is maintained by the Commissioner of Banking and Financial Institutions, and may be updated not more than once a year by the commissioner. The June 2, 2014, edition of Appendix A is incorporated by reference as part of this rule. A copy of Appendix A can be obtained from the Division of Banking and Financial Institutions, Department of Administration, 301 South Park, P.O. Box 200546, Helena, MT 59620-0546 or found on the department's web site at �

(3) When a bank reproduces records in any manner in the regular course of business as permitted by 32-1-492 through 32-1-494, MCA, the retention period of the reproduced records is the same as specified in Appendix A.

(4) Banks shall comply with all applicable federal banking laws and regulations requiring specific retention periods for the records enumerated in those laws or regulations. If an applicable federal banking law or regulation concerning record retention conflicts with a retention period contained in 32-1-491, MCA, this rule, or Appendix A, a bank shall comply with whichever retention period is longer. Banks shall comply with other applicable state laws governing retention of personnel records, corporation records, etc.

(5) If a bank does not maintain records set forth in Appendix A, but maintains similar records with equivalent information, the bank's similar records must be retained for the time set forth for records in Appendix A.

(6) Records not covered by this rule or 32-1-491, MCA, must be retained for a period of time determined appropriate by the bank's board of directors. Retention periods determined appropriate by the board must be maintained as a permanent part of the board's minutes.

(7) "Customer accounts," for record retention purposes under 32-1-491, MCA, and this rule, means customer deposit accounts including savings deposit accounts, checking accounts, demand deposit accounts, certificates of deposit, safety deposit boxes, trust accounts, Negotiable Order of Withdrawal (NOW) accounts, and money market deposit accounts.

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(1) Banks are permitted to underwrite issues of investment securities if the following conditions are met:

(a) No banks having unimpaired capital and surplus of less than $5,000,000 shall underwrite or otherwise participate as principal in the marketing of securities, except for the account of and upon specific instructions from its customer.

(b) Banks that qualify to underwrite or participate by having unimpaired capital and surplus of $5,000,000 or greater, may do so with any securities that such banks could purchase for their own account.

(c) Accounting and other records of trading in such securities must be separately maintained from accounting and other records relating to purchases of securities for the bank's own account.

(2) A copy of 12 CFR Part 24.1 through 24.7 may be obtained from the Division of Banking and Financial Institutions of the Department of Administration, 301 South Park, Suite 316, P.O. Box 200546, Helena, MT 59620-0546.

This rule has been repealed.

(2) "Contract" means a debt cancellation contract or a debt suspension agreement.

(3) "Customer" means an individual who obtains from a bank an extension of credit that is primarily for personal, family, or household purposes. For purposes of this subchapter, the term means the same thing as "borrower."

(4) "Debt cancellation contract" means a loan term or contractual arrangement modifying loan terms under which a bank agrees, for a fee, to suspend all or part of a customer's obligation to repay an extension of credit from that bank upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The extension of credit to which it pertains may be a direct loan made by the bank or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the bank. In the case of an indirect loan in the form of a retail installment sales contract, the debt cancellation contract may be offered by the bank through a nonexclusive, unaffiliated agent contingent upon the bank purchasing or taking assignment of the indirect loan. The agreement may be separate from or a part of other loan documents. A debt cancellation contract may be offered and purchased either contemporaneously with the other terms of the loan agreement or subsequently.

(5) "Debt suspension agreement" means a loan term or contractual arrangement modifying loan terms under which a bank agrees, for a fee, to suspend all or part of a customer's obligation to repay an extension of credit from that bank upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The extension of credit may be a direct loan made by the bank or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the bank. In the case of an indirect loan in the form of a retail installment sales contract, the debt suspension agreement may be offered by the bank through a nonexclusive, unaffiliated agent contingent upon the bank purchasing or taking assignment of the indirect loan. The agreement may be separate from or a part of other loan documents. The term "debt suspension agreement" does not include loan payment deferral arrangements in which the triggering event is the borrower's unilateral election to defer repayment or the bank's unilateral decision to allow a deferral of repayment.

(6) "Guaranteed asset protection (GAP) waiver or agreement" means a term of an extension of credit or contractual arrangement modifying terms of an extension of credit for the purchase of titled personal property under which a bank agrees to cancel the customer's obligation to repay the portion of the extension of credit that exceeds the amount paid by the primary insurer of the titled personal property upon the insurer's declaration that the titled personal property is a total loss or determination that the titled personal property is stolen and not recoverable.

(7) "Loan" or "extension of credit" means a direct or indirect advance of funds to a customer made on the basis of any obligation of that customer to repay the funds or that is repayable from specific property pledged by or on the customer's behalf. The term also includes any liability of a bank to advance funds to or on behalf of a customer pursuant to a contractual commitment.

(8) "Residential mortgage loan" means a loan for personal, family, or household purposes secured by a one- to four-family residential property.

(a) manage the risks associated with debt cancellation contracts and debt suspension agreements in accordance with bank safety and soundness principles by establishing and maintaining effective risk management and control processes over its debt cancellation contracts and debt suspension agreements to include:

(i) appropriate recognition and financial reporting of income, expenses, assets, and liabilities;

(ii) appropriate treatment of all expected and unexpected losses associated with the contracts; and

(iii) assessment of the adequacy of its internal control and risk mitigation activities in view of the nature and scope of the bank's debt cancellation and debt suspension program; and

(b) obtain and maintain in effect insurance from an insurer authorized or otherwise registered with the State Auditor and Commissioner of Insurance (State Auditor) to do business in Montana, except as provided in (2). The insurance must cover 100% of the at-risk loan balances to which the bank's debt cancellation contracts pertain.

(2) An insurer authorized by the insurance regulator in an out-of-state bank's home state that has issued a policy to the out-of-state bank covering all of its debt cancellation contractual liabilities need not be authorized or otherwise registered with the State Auditor.

(a) notice of the prohibited acts or practices contained in ARM 2.59.119;

(b) the fee applicable to the contract and any payment options;

(c) the refund policy;

(d) whether the customer is barred from using the credit line to which it pertains if the debt cancellation contract or debt suspension agreement is activated;

(e) eligibility requirements, conditions, and exclusions;

(f) that a debt suspension agreement, if activated, does not cancel the debt, but only suspends payment requirements; and

(g) notice that cancellation of debt may result in a tax liability to the customer if activated.

(2) The requirements for the timing and method of disclosure are:

(a) the bank shall make the disclosures in (1) and the short-form disclosures under ARM 2.59.123 orally at the time the bank first solicits the purchase of a contract;

(b) the bank shall make the long-form disclosures under ARM 2.59.123 in writing before the customer completes the purchase of the contract. If the initial solicitation occurs in person, the bank shall provide the long-form disclosure in writing at that time;

(c) if the contract is solicited by telephone, the bank shall provide the disclosures in (1) and the short-form disclosures under ARM 2.59.123 orally and shall mail the long-form disclosures, and, if appropriate, a copy of the contract to the customer within three business days beginning on the first business day after the telephone solicitation; and

(d) if the contract is solicited through written materials such as mail inserts or "take one" applications, the bank may provide only the disclosures in (1) and the short-form disclosure under ARM 2.59.123 to the customer within three business days beginning on the first business day after the customer contacts the bank in response to the solicitation, subject to the requirements of ARM 2.59.122(3)(b).

(3) The disclosures required by these rules must be conspicuous, simple, direct, readily understandable, and designed to call attention to the nature and significance of the information provided. The methods may include use of plain language headings, easily readable typeface and size, wide margins and ample line spacing, boldface or italics for key words, and/or distinctive type style or graphic devices.

(4) The disclosures in the short-form disclosure under ARM 2.59.123 are required in advertisements and promotional material for contracts unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the bank.

(5) The disclosures described in these rules may be provided through electronic media in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq. or the Uniform Electronic Transaction Act, Title 30, chapter 18, part 1, MCA.

(a) extending credit or altering the terms or conditions of an extension of credit conditioned upon the customer entering into a debt cancellation agreement or debt suspension agreement with the bank. The prohibition is commonly referred in the regulatory context as the anti-tying provision;

(b) engaging in any practice or using any advertisement that could mislead or otherwise cause a reasonable person to reach an erroneous belief with respect to information that must be disclosed under ARM 2.59.118, including what is being offered, the cost, and/or the terms of the contract;

(c) offering debt cancellation contracts or debt suspension agreements that contain terms:

(i) giving the bank the right unilaterally to modify the contract unless:

(A) the modification is favorable to the customer and is made without additional charge to the customer; or

(B) the customer is notified of any proposed change and is provided a reasonable opportunity to cancel the contract without penalty before the change goes into effect; or

(ii) requiring an up-front, lump-sum single payment for the contract if the extension of credit to which the contract pertains is a residential mortgage loan.

(2) A bank may offer a customer a contract that does not provide for a refund only if the bank also offers that customer a bona fide option to purchase a comparable contract that provides for a refund.

(3) A bank shall calculate the amount of a refund using a method at least as favorable to the customer as the actuarial method.

(2) If a bank offers the customer the option to finance the single payment by adding it to the loan principal, the bank must also disclose, in accordance with ARM 2.59.120, whether the customer may cancel the agreement and receive a refund, and, if so, the time period during which the customer may do so.

(1) Before entering into a debt cancellation contract or debt suspension agreement, a bank shall obtain the customer's written affirmative election to purchase the contract and a written acknowledgment of receipt of the disclosures required under ARM 2.59.118.

(2) The election and acknowledgment information must be conspicuous, simple, direct, readily understandable, and designed to call attention to its significance.

(3) The election and acknowledgment information satisfies these standards if it conforms to the following requirements:

(a) if the sale of a contract occurs by telephone, the customer's affirmative election to purchase may be made orally, provided that the bank:

(i) maintains sufficient documentation to show that the customer received the short-form disclosures substantially similar to ARM 2.59.123(1) and then affirmatively elected to purchase the contract;

(ii) mails to the customer the affirmative written election and written acknowledgment together with a long-form disclosure substantially similar to ARM 2.59.123(2), within three business days after the telephone solicitation, and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the customer; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the bank has mailed the long-form disclosures to the customer.

(b) if the contract is solicited through written materials such as mail inserts or "take one" applications and a bank provides only the short-form disclosures in the written materials, then the bank shall mail the acknowledgment of receipt of disclosures, together with a long-form disclosure as provided under ARM 2.59.123(2), to the customer within three business days, beginning on the first business day after the customer contacts the bank or otherwise responds to the solicitation. A bank may not obligate the customer to pay for the contract until after the bank has received the customer's written acknowledgment of receipt of disclosures unless the bank:

(i) maintains sufficient documentation to show that the bank provided the acknowledgment of receipt of disclosures to the customer;

(ii) maintains sufficient documentation to show that the bank made reasonable efforts to obtain from the customer a written acknowledgment of receipt of the long-form disclosures; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the bank has mailed the long-form disclosures to the customer.

(4) The affirmative election and acknowledgment may be made electronically in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq. or the Uniform Electronic Transaction Act, Title 30, chapter 18, part 1, MCA.

(1) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model short form disclosure at 12 CFR 37 App A revised as of January 1, 2010. The form must be adapted by the bank to include the disclosures required under ARM 2.59.118(1)(a) and (g).

(2) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model long-form disclosure at 12 CFR 37 App B revised as of January 1, 2010. The form must be adapted by the bank to include the disclosures required under ARM 2.59.118(1)(a) and (g).

(3) The model forms in (1) and (2), which are available at Title 12, Volume I, Part 37, Appendices A and B in the Code of Federal Regulations, are not mandatory, but a bank that provides disclosures in a form substantially similar to the adapted model forms will be deemed to have satisfied the disclosure requirements applicable to the bank concerning its debt cancellation and/or debt suspension program.

(1) A GAP waiver or agreement is a type of debt cancellation contract. A debt cancellation contract with a GAP feature offered in connection with an extension of credit for the purchase of titled personal property for personal, family, or household use is a single product. A bank offering a debt cancellation contract with a GAP feature may do so through nonexclusive, unaffiliated agents such as automobile dealers. The fee arrangement between a bank and a nonexclusive, unaffiliated agent through which the debt cancellation product is offered does not create a separate contract that violates the anti-tying provision of ARM 2.59.119(1)(a).

(1) "Bank" or "state bank" has the same meaning as "eligible state bank" in (10).

(2) "Borrower" means:

(a) a person who is named as a borrower or debtor in a loan or extension of credit;

(b) a person to whom a bank has credit exposure arising from a derivative transaction or securities financing transaction entered by the bank; or

(c) any other person, including a drawer, endorser, or guarantor, who is deemed to be a borrower under the direct benefit or common enterprise tests in 12 CFR 32.5 and ARM 2.59.108.

(3) "Contractual commitment to advance funds" means:

(a) a bank's obligation to:

(i) make payment directly or indirectly to a third person contingent upon default by a customer of the bank in performing an obligation and to make such payment in keeping with the agreed-upon terms of the customer's contract with the third person, or to make payments upon some other stated condition;

(ii) guarantee or act as surety for the benefit of a person;

(iii) advance funds under a qualifying commitment to lend, as defined in 12 CFR 32.2(t); or

(iv) advance funds under a standby letter of credit, as defined in 12 CFR 32.2(ee) and 12 CFR 208.24, a put, or other similar arrangement.

(b) The term does not include commercial letters of credit and similar instruments:

(i) under which the issuing bank expects the beneficiary to draw on the issuer;

(ii) that do not guarantee payment; and

(iii) that do not provide payment if a third party defaults.

(4) "Credit derivative" means a financial contract executed under standard industry credit derivative documentation that allows one party (the protection purchaser) to transfer the credit risk of one or more exposures to another party (the protection provider).

(5) "Derivative transaction" includes any transaction that is a contract, agreement, swap, warrant, note, or option that is based, in whole or in part, on the value of, any interest in, or any quantitative measure or the occurrence of any event relating to one or more commodities, securities, currencies, interest, or other rates, indices, or other assets. The term includes a securities financing transaction.

(6) "Effective margining arrangement" means a master legal agreement governing derivative transactions between a bank and a counterparty that requires the counterparty to post, on a daily basis, variation margin to fully collateralize that amount of the bank's net credit exposure to the counterparty that exceeds $25 million created by the derivative transactions covered by the agreement.

(7) "Eligible credit derivative" means a single-name credit derivative or a standard, non-tranched index credit derivative provided that:

(a) the derivative contract meets the requirements of an eligible guarantee as defined in (8) and has been confirmed by the protection purchaser and the protection provider;

(b) any assignment of the derivative contract has been confirmed by all relevant parties;

(c) if the credit derivative is a credit default swap, the derivative contract includes the following credit events:

(i) failure to pay any amount due under the terms of the reference exposure, subject to any applicable minimal payment threshold that is consistent with standard market practice and with a grace period that is closely in line with the grace period of the reference exposure; and

(ii) bankruptcy, insolvency, or inability of the obligor on the reference exposure to pay its debts, or its failure or admission in writing of its inability generally to pay its debts as they become due, and similar events;

(d) the terms and conditions dictating the manner in which the derivative contract is to be settled are incorporated into the contract;

(e) if the derivative contract allows for cash settlement, the contract incorporates a robust valuation process to reliably estimate loss with respect to the derivative and specifies a reasonable period for obtaining post-credit event valuations of the reference exposure;

(f) if the derivative contract requires the protection purchaser to transfer an exposure to the protection provider at settlement, the terms of at least one of the exposures that is permitted to be transferred under the contract provide that any required consent to transfer may not be unreasonably withheld; and

(g) if the credit derivative is a credit default swap, the derivative contract:

(i) identifies the parties responsible for determining whether a credit event has occurred;

(ii) specifies that the determination is not the sole responsibility of the protection provider; and

(iii) gives the protection purchaser the right to notify the protection provider of the occurrence of a credit event.

(8) "Eligible guarantee" means a guarantee that:

(a) is written and unconditional;

(b) covers all or a pro rata portion of all contractual payments of the obligor on the reference exposure;

(c) gives the beneficiary a direct claim against the protection provider;

(d) is not unilaterally cancelable by the protection provider for reasons other than the beneficiary's breach of contract;

(e) is legally enforceable against the protection provider in a jurisdiction where the protection provider has sufficient assets against which a judgment may be attached and enforced;

(f) requires the protection provider to make payment to the beneficiary on the occurrence of a default (as defined in the guarantee) of the obligor on the reference exposure in a timely manner without the beneficiary first having to take legal action to pursue the obligor for payment;

(g) does not increase the beneficiary's cost of credit protection on the guarantee in response to deterioration in the credit quality of the reference exposure; and

(h) is not provided by an affiliate of the bank, unless the affiliate is an insured depository institution, bank, securities broker or dealer, or insurance company that:

(i) does not control the bank; and

(ii) is subject to consolidated supervision and regulation comparable to that imposed on U.S. depository institutions, securities broker-dealers, or insurance companies as applicable.

(9) "Eligible protection provider" means:

(a) a sovereign entity (a central government, including the U.S. government, an agency, department, ministry, or central bank);

(b) the Bank for International Settlements, the International Monetary Fund, the European Central Bank, the European Commission, or a multilateral development bank;

(c) a federal home loan bank;

(d) the Federal Agricultural Mortgage Corporation;

(e) a depository institution, as defined in section 3 of the Federal Deposit Insurance Act, 12 USC 1813(c);

(f) a bank holding company, as defined in section 2 of the Bank Holding Company Act, as amended, 12 USC 1841;

(g) a savings and loan holding company, as defined in section 10 of the Home Owners' Loan Act, 12 USC 1467a;

(h) a securities broker or dealer registered with the Securities and Exchange Commission under the Securities Exchange Act of 1934, 15 USC 78o, et seq.;

(i) an insurance company that is subject to the supervision of a state insurance regulator;

(j) a foreign banking organization;

(k) a non-U.S.-based securities firm or a non-U.S.-based insurance company that is subject to consolidated supervision and regulation comparable to that imposed on U.S. depository institutions, securities broker-dealers, or insurance companies; and

(l) a qualifying central counterparty.

(10) "Eligible state bank" means a bank organized under Montana laws that:

(a) is well-capitalized as defined in the prompt corrective action rules applicable to the bank; and

(b) has a composite rating of 1 or 2 under the Uniform Financial Institutions Rating System in connection with the bank's most recent examination or subsequent review.

(11) "Loans," "extensions of credit," or "obligations" have the meaning in 32-1-432, MCA, and any credit exposure determined under ARM 2.59.129 arising from a derivative transaction or a securities financing transaction.

(a) The terms include:

(i) a contractual commitment to advance funds;

(ii) a maker or endorser's obligation arising from a bank's discount of commercial paper;

(iii) a bank's purchase of third-party paper subject to an agreement that the seller will repurchase the paper upon default or at the end of a stated period. The amount of the bank's loan is the total unpaid balance of the paper owned by the bank less any applicable dealer reserves retained by the bank and held by the bank as collateral security. Where the seller's obligation to repurchase is limited, the bank's loan is measured by the total amount of the paper the seller may ultimately be obligated to repurchase. A bank's purchase of third-party paper without direct or indirect recourse to the seller is not a loan or extension of credit to the seller;

(iv) an overdraft, whether or not prearranged, but not an intraday overdraft for which payment is received before the close of business of the bank that makes the funds available;

(v) the sale of federal funds with a maturity of more than one business day, but not federal funds with a maturity of one day or less or federal funds sold under a continuing contract;

(vi) loans or extensions of credit that have been charged off on the books of the bank in whole or in part unless the loan or extension of credit is:

(A) unenforceable by reason of discharge in bankruptcy;

(B) no longer legally enforceable because of expiration of the statute of limitations or a judicial decision; or

(C) no longer legally enforceable for other reasons provided that the bank maintains sufficient records to demonstrate that the loan is unenforceable; and

(vii) a bank's purchase of securities subject to an agreement that the seller will repurchase the securities at the end of a stated period, but does not include a bank's purchase of Type I securities, as defined in (15), subject to a repurchase agreement, where the purchasing bank has assured control over or has established its rights to the Type I securities as collateral.

(b) The terms do not include:

(i) additional funds advanced for a borrower's benefit by a bank for payment of taxes, insurance, utilities, security, and maintenance and operating expenses necessary to preserve the value of real property securing the loan, consistent with safe and sound banking practices, but only if the advance is for the protection of the bank's interest in the collateral, and provided that such amounts must be treated as an extension of credit if a new loan or extension of credit is made to the borrower;

(ii) accrued and discounted interest on an existing loan or extension of credit, including interest that has been capitalized from prior notes and interest that has been advanced under terms and conditions of a loan agreement;

(iii) financed sales of a bank's own assets, including other real estate owned, if the financing does not put the bank in a worse position than when the bank held title to the assets;

(iv) a renewal or restructuring of a loan as a new "loan or extension of credit," following the exercise by a bank of reasonable efforts, consistent with safe and sound banking practices, to bring the loan into conformance with the lending limit, unless new funds are advanced by the bank to the borrower (except in circumstances permitted under 12 CFR 32.3(b)(5)), a new borrower replaces the original borrower, or unless the department singly or in collaboration with the appropriate federal banking agency determines that a renewal or restructuring was undertaken as a means to evade the bank's lending limit;

(v) amounts paid against uncollected funds in the normal process of collection;

(vi) with regard to participations:

(A) that portion of a loan or extension of credit sold as a participation by a bank on a nonrecourse basis, provided that the participation results in a pro rata sharing of credit risk proportionate to the respective interests of the originating and participating lenders. Where a participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing will be deemed to exist only if the agreement also provides that, in the event of a default or comparable event defined in the agreement, participants shall share in all subsequent repayments and collections in proportion to their percentage participation at the time of the occurrence of the event;

(B) when an originating bank funds the entire loan, it must receive funding from the participants before the close of business of its next business day. If the participating portions are not received within that period, then the portions funded will be treated as a loan by the originating bank to the borrower. If the portions so attributed to the borrower exceed the originating bank's lending limit, the loan may be treated as nonconforming subject to the circumstances included in 12 CFR 32.2(q)(2)(vi)(B) rather than a violation if:

(I) the originating bank had a valid and unconditional participation agreement with one or more participants that was sufficient to reduce the loan to within the originating bank's lending limit;

(II) the participant reconfirmed its participation and the originating bank had no knowledge of information that would permit the participant to withhold its participation; and

(III) the participation was to be funded by close of business of the originating bank's next business day.

(12) "Qualifying central counterparty" has the same meaning as the term has in 12 CFR Part 3, Appendix C, Section 2.

(13) "Qualifying master netting agreement" means any written, legally enforceable bilateral agreement, provided that:

(a) the agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default, including bankruptcy, insolvency, or similar proceeding of the counterparty;

(b) the agreement provides the bank the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set off collateral promptly upon an event of default of the counterparty, including upon an event of bankruptcy, insolvency, or similar proceeding, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions;

(c) the bank has conducted sufficient legal review to conclude with a well-founded basis (and maintains sufficient documentation of that legal review) that:

(i) the agreement meets the requirements of (13)(b); and

(ii) in the event of a legal challenge (including one resulting from default or from bankruptcy, insolvency, or similar proceedings), the relevant court and administrative authorities would find the agreement to be legal, valid, binding, and enforceable under the law of the relevant jurisdictions;

(d) the bank establishes and maintains procedures to monitor possible changes in relevant law and to ensure that the agreement continues to satisfy the requirements of this definition; and

(e) the agreement does not contain a walkaway clause (that is, a provision that permits a nondefaulting counterparty to make a lower payment than it would make otherwise under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement).

(14) "Securities financing transaction" means a repurchase agreement, reverse repurchase agreement, securities lending transaction, or securities borrowing transaction.

(15) "Type I securities" means:

(a) obligations of the United States;

(b) obligations issued, insured, or guaranteed by a department or an agency of the United States government, if the obligation, insurance, or guarantee commits the full faith and credit of the United States for the repayment of the obligation;

(c) obligations issued by a department or agency of the United States government or an agency or political subdivision of a state of the United States, that represent an interest in a loan or a pool of loans made to third parties, if the full faith and credit of the United States have been validly pledged for the full and timely payment of interest on, and principal of, the loans in the event of nonpayment by the third party obligor(s); and

(d) general obligations of a state of the United States or any political subdivision thereof; and

(e) municipal bonds if the bank is well capitalized.

(1) An eligible state bank as defined in ARM 2.59.125 may engage in any derivative transaction if the bank has a written policy approved by its board of directors that:

(a) identifies the types of derivative transactions in which the bank is authorized to engage;

(b) establishes an exposure limit for each type of authorized derivative transaction and an aggregate exposure limit for all of the bank's authorized derivative transactions expressed in relation to the bank's lending limit;

(c) is consistent with bank safety and soundness principles; and

(d) requires the designation of an employee to be in charge of the bank's derivatives program who:

(i) has demonstrable expertise and understanding of derivative transactions; and

(ii) is responsible for periodic testing of the model(s) used to measure credit exposure against actual outcomes.

(1) For purposes of 32-1-432, MCA, derivative transactions and securities financing transactions must be included in the calculation of lending limits.

(2) The calculation of credit exposure arising from derivative transactions and securities financing transactions for lending limit purposes under 32-1-432, MCA, must be determined pursuant to Appendix A to ARM 2.59.129 dated April 20, 2015.

(3) Loans not subject to lending limits of 32-1-432, MCA, and this regulation are:

(a) credit exposures arising from transactions financing certain government securities. Credit exposures arising from securities financing transactions in which the securities financed are Type I securities, as defined in ARM 2.59.125 and 12 CFR 1.2(j);

(b) intraday credit exposures arising from derivative transactions or securities financing transactions; and

(c) other exceptions as applicable.

(1) A loan or extension of credit within a bank's legal lending limit when made will not be deemed a violation but will be treated as nonconforming if the loan or extension of credit is no longer in conformity with the bank's lending limit because:

(a) the bank's capital has declined, borrowers have subsequently merged or formed a common enterprise, lenders have merged, or the lending limit or capital rules changed;

(b) collateral securing the loan to satisfy the requirements of a lending limit exception has declined in value; or

(c) in the case of a credit exposure arising from a derivative transaction or a securities financing transaction and measured by either the Current Exposure Method or the Basel Collateral Haircut Method specified in ARM 2.59.129 and Appendix A to ARM 2.59.129 dated April 20, 2015, the credit exposure subject to the lending limits of 32-1-432, MCA, or this rule increases after execution of the transaction.

(2) A bank shall use reasonable efforts to bring a loan or extension of credit that is nonconforming as a result of (1)(a) or (1)(c) into conformity with the bank's lending limit unless to do so would be inconsistent with safe and sound banking practices.

(3) A bank shall bring a loan that is nonconforming as a result of circumstances described in (1)(b) into conformity with the bank's lending limit within 30 calendar days, except when judicial proceedings, regulatory actions or other extraordinary circumstances beyond the bank's control prevent it from taking action.

(1) For purposes of determining a bank's lending limit under 32-1-432, MCA, the bank's credit exposure arising from a derivatives transaction or a securities financing transaction entered by a bank must be calculated in accordance with the methods and models contained in Appendix A to ARM 2.59.129 dated April 20, 2015, which is adopted and incorporated by reference. Appendix A to ARM 2.59.129 dated April 20, 2015, may be found on the department's web site at http://banking.mt.gov/Home/Forms under Banks and Trust Companies.

(1) An applicant filing under 32-1-378(1)(b), MCA, shall use the Application for Change in Control form dated June 29, 2020, which is located at www.banking.mt.gov.

(2) An applicant or other person subject to this rule shall notify the department immediately of any material changes in a notice or application submitted to the department, including changes in financial or other conditions.

(3) The department may require a person who is obligated to file an application under 32-1-378, MCA, to appoint a registered agent in this state for service of process upon the filing of such notice or as a condition to the acceptance of such application for review.

This rule has been repealed.

For purposes of 32-1-212, MCA, the following definitions apply:

(1) "Interested in" means the commissioner or deputy commissioner:

(a) is an officer, director, or employee of a supervised entity or an individual or person owning or controlling a supervised entity;

(b) owns or deals in, directly or indirectly, the shares or obligations of a supervised entity or a person that owns or controls the supervised entity;

(c) receives, directly or indirectly, any salary, fee, or compensation from a supervised entity or any officer, director, or employee of a supervised entity; or

(d) is married to an individual who is employed by a supervised entity.

(2) "Supervised entity" means any entity chartered or supervised by the department.

(3) An investment in a mutual fund, even a proprietary mutual fund, serviced or advised by a supervised entity, does not constitute having an interest in the supervised entity.

(4) Any indebtedness incurred under 32-1-212, MCA, shall be disclosed in writing annually to the commissioner. The commissioner shall disclose any indebtedness incurred under 32-1-212, MCA, in writing annually to the director of the department.

(5) Any employee of the department who cannot timely pay any sum due to a supervised entity must immediately disclose that fact to the commissioner. If the commissioner cannot timely pay any sum due to a supervised entity, the commissioner must immediately disclose that fact to the director of the department.

This rule has been repealed.

(1) Upon conversion:

(a) the resulting state bank succeeds, without other transfer, to all the rights and property of the converted bank and is subject to all the debts and liabilities of the converted bank in the same manner as if the resulting state bank itself had incurred them;

(b) all rights of creditors of the converted bank and all liens upon the converted bank's property are unimpaired by the transfer, provided that the liens are limited to the affected property immediately prior to the time when the conversion became effective;

(c) title to all real, personal, and mixed property owned by the converted bank is vested in the resulting state bank without reversion or impairment and without the necessity of any instrument of transfer;

(d) the resulting state bank has all the liabilities, duties, and obligations of the converted bank, including obligations as fiduciary, personal representative, administrator, trustee, or guardian; and

(e) any pending action or other judicial proceeding to which the converted bank was a party may continue to be prosecuted to final judgment, order, or decree as if the conversion had not occurred, or the resulting bank may be substituted as a party to the action or proceeding.

(2) Upon conversion, a resulting bank that is organized under the laws of this state:

(a) shall designate and operate a location of the converted bank as its main banking house; and

(b) may maintain the branch banks and other offices previously maintained by the converted bank.

(3) A bank that desires to convert from a national bank to a state bank shall use the Application for Conversion of an Existing National-Chartered Bank to a State-Chartered Bank form dated June 30, 2020, which is located on the department's website at banking.mt.gov.

(1) Banks shall use the List of Officers and Directors form dated June 29, 2020, which is located on the department's website at www.banking.mt.gov to report the directors and officers elected at the annual meeting and the board meeting to the department. The report shall be submitted to the department within thirty days of the date of the last meeting at which an election of officers or directors was held.

This rule has been repealed.

This rule has been repealed.

For purposes of 32-1-432, MCA, the following definitions apply:

(1) "Commitment to lend or extend credit" includes, but is not limited to:

(a) undisbursed portions of operating, construction or other lines of credit, up to limits established by a written agreement between the lender and the borrower;

(b) undisbursed portions of credit lines established to cover overdrafts;

(c) undisbursed portions of credit card plans; and

(d) standby letters of credit.

(2) "Loan or extension of credit" includes, but is not limited to:

(a) direct loans, whether on the bank's books or charged off the bank's books, subject to the exclusions in ARM 2.59.143.

(b) loans, extensions of credit, or participation in loans or extensions of credit sold with recourse to or guaranteed by the bank;

(c) letters of credit, other than standby letters of credit;

(d) overdrafts, excluding intra-day overdrafts for which the bank receives payment prior to its close of business; and

(e) any credit exposure of a bank to a counterparty arising from a derivative transaction or a securities financing transaction as defined in ARM 2.59.125.

(3) "Person" means an individual, a corporation, a government, governmental subdivision or agency, a business trust, an estate, a trust, a partnership or association, a limited liability company, two or more persons having a joint or common interest, or any other legal or commercial entity.

(1) If no direct benefit is received or no common enterprise exists, the combined loans or extensions of credit to a commonly owned or controlled group of borrowers shall not exceed three times the bank's lending limit.

(1) Loans or extensions of credit to a person will be combined with loans or extensions of credit to one or more other persons when:

(a) proceeds of a loan or extension of credit are to be used for the direct benefit of the other person; or

(b) a common enterprise is deemed to exist between the persons, to the extent that loan proceeds are used for the benefit of the common enterprise and repayment is dependent upon the common enterprise.

(2) A loan or extension of credit guaranteed by a person shall be aggregated with the person's other loans and extensions of credit only to the extent that the person receives direct benefit from the loan.

(1) A direct benefit exists when the proceeds of a loan or extension of credit to a person are deemed to be used to the advantage of another person. The amount of the loan will be attributed to the other person when the proceeds, or assets purchased with the proceeds, are transferred to the other person. If the proceeds are used to acquire property, goods, or services through a bona fide arm's length transaction, a direct benefit does not exist regarding the seller of the property, goods, or services. A bona fide arm's length transaction is an actual transaction, performed in good faith, between two or more parties, with each party acting in their own self-interest.

(1) A common enterprise occurs when two or more persons combine to acquire, operate, or control a business enterprise or property interest.

(2) Credit to a common enterprise includes:

(a) loans or extensions of credit to two or more persons when the loans or extensions of credit are used for a common purpose; the expected source of repayment for each loan or extension of credit is the same for two or more of the persons, and those persons lack another source of income from which the loans or extensions of credit, together with the person's other liabilities, may be fully repaid; and

(b) loans or extensions of credit made to persons who are related directly or indirectly through common control, including where one person is directly or indirectly controlled by another person; and if substantial financial interdependence exists between or among the persons. Substantial financial interdependence is deemed to exist when 50% or more of one person's gross receipts or gross expenditures, on an annual basis, are derived from transactions with the other person.

(1) The following items will be excluded when calculating the amount of a person's total loans and extensions of credit:

(a) loans or extensions of credit, and participation in loans and extensions of credit, that have been sold, if:

(i) the loan, extension of credit, or the portion of the loan or extension of credit sold as a participation is sold without recourse to the selling bank; or

(ii) the participation agreement provides for a pro rata sharing of credit risk proportionate to the respective interests of the originating and participating lenders. Where a participation agreement provides that repayment must be applied first to the portions sold, a pro rata sharing will be deemed to exist only if the agreement also provides that, in the event of a default or comparable event defined in the agreement, participants must share in all subsequent repayments and collections in proportion to their percentage participation at the time of the occurrence of the event.

(b) loans, or extensions of credit, including portions thereof, that have been charged off the books of the bank in whole or in part, provided that the amounts charged off are:

(i) unenforceable by reason of discharge in bankruptcy;

(ii) no longer legally enforceable because of expiration of the statute of limitations or a judicial decision; or no longer legally enforceable for other reasons, provided that the bank maintains sufficient records to demonstrate that the loan is unenforceable;

(iii) credit exposures arising from securities financing transactions in which the securities financed are Type I securities, as defined in 12 CFR 1.2(j);

(iv) intraday credit exposures arising from a derivative transaction; or

(v) all other loans or portions of loans specifically exempted by provisions of 32-1-432, MCA, or other applicable laws.

This rule has been repealed.

This rule has been repealed.

(1) "Advertising" or "advertisement" means any written or oral statement or depiction that includes terms or availability of loans or that is designed to create interest in a consumer loan product and is conveyed in any manner or medium including but not limited to radio, television, telemarketing script and materials, on-hold script, upsell script, infomercials, the Internet, web pages, cellular network, film, slide, audio program transmitted over a telephone system, label, brochure, newspaper, magazine, pamphlet, leaflet, circular, mailer, letter, catalogue, poster, chart, billboard display, and promotional materials and items.

(2) A licensee shall maintain copies or images of all of the licensee's advertising as defined in (1) for a period of at least 12 months after the last date of the advertisement's use or until an examination of the licensee, including review of the advertising, has been accomplished by the department, whichever occurs first. Advertising may be maintained in an electronic format that is capable of being reproduced in or converted to hard copy form. All advertising copy records must have the following information noted thereon:

(a) the name or names of all advertising media used and the dates when the advertising publicly appeared; and

(b) the full text of audio and video advertising.

(3) A licensee may not use so-called blind advertisements as, for example, an advertisement giving only a telephone number, post office box or newspaper box number, or a name other than that of the licensee.

(4) A licensee may not use any advertising that is inconsistent with the Montana Unfair Trade Practices and Consumer Protection Act, Title 30, chapter 14, parts 1 and 2, MCA, or with federal laws including 15 USC 45(a)(1) or the rules promulgated thereunder.

(5) An unlicensed person may not directly or indirectly advertise terms or availability of consumer loans targeted at deriving profits from Montana markets. The prohibition against advertising by unlicensed persons is not dependent upon whether a loan application is submitted or whether a consumer loan is consummated as a result of the advertising. This section does not apply to media outlets and may not be construed to impose a duty on media outlets to verify licensure of advertisers.

(1) At the time of filing an application for initial license or a renewal license under the Montana Consumer Loan Act, the applicant shall file with the department a fee disclosure statement and a failure- or inability-to-pay disclosure statement, collectively referred to as "disclosure statements," unless otherwise specified.

(a) The fee disclosure statement must contain:

(i) the interest rate or range of interest rates that the licensee charges for each type of loan product offered not to exceed the maximum allowed under 32-5-301(1), MCA;

(ii) known third-party fees and reasonable estimates of unknown third-party fees allowed under 32-5-301, MCA. Consumers may not be charged more than the third party's actual fee; and

(iii) examples of the total cost to the consumer for each type of loan product offered as follows:

(A) an example using the lowest available interest rate for the loan type including all third-party fees typically charged for that loan type; and

(B) an example using the highest interest rate chargeable for the loan type including all third-party fees typically charged for that loan type.

(b) The failure- or inability-to-pay disclosure statement must contain information about fees that may be charged during the term of the loan and afterwards arising from the consumer's failure or inability to pay as agreed under the terms of the loan agreement. The fee information that must be disclosed is:

(i) insufficient funds/dishonored check or check equivalent fee under 32-5-407, MCA;

(ii) past-due fee under 32-5-301, MCA, if provided for in the contract;

(iii) deferral/extension fee under 32-5-301, MCA, if provided for in the contract; and

(iv) reasonable attorney fees under 32-5-407, MCA, if provided for in the contract and if the licensee sues the consumer in a judicial action on the loan agreement and wins.

(2) The disclosure statements must be printed in black letters and numbers on a white background using a font style and size, type face, or similar graphics to call the consumer's attention to the information.

(3) The disclosure statements may, but need not, be combined in one document.

(4) A licensee shall maintain on file with the department current disclosure statement(s) and shall not charge fees or rate(s) of interest in excess of those contained in the disclosure statements on file with the department or in excess of those authorized under Title 32, chapter 5, MCA. Currently dated, amended disclosure statements may be filed with the department at any time. Amended disclosure statements have only prospective application from the date of filing with the department. The disclosure statements in effect at the time a loan is made remain in effect for that loan until termination of the loan agreement unless:

(a) the loan is refinanced; or

(b) an express provision allowing modification of interest rate or fees during the term of the loan is contained in the loan agreement and authorized by law.

(5) A licensee shall conspicuously display the licensee's current disclosure statements at its business location(s) where loans to persons residing in Montana are negotiated or made, so as to be readily visible to prospective loan applicants before completion of a loan application begins.

(6) If a licensee conducts business through the Internet, the following information must be displayed to all online loan applicants residing in Montana on a web page that cannot be circumvented and must be viewed before completion of the loan application can begin:

(a) the licensee's name and license number (sometimes referred to as credential number or unique ID) exactly as they appear on the license; and

(b) the current disclosure statements that are filed with the department as required under this rule.

(7) A licensee shall observe the following procedures in computing interest:

(a) interest must be computed at the applicable rate on the balance of the loan from the date of the previous payment to the date of the following payment; and

(b) interest must be computed using a 365-day year, or in the case of a leap year a 366-day year, and by counting the actual number of days from one payment to the next.

(8) For purposes of implementing 32-5-301, MCA, the phrase "only once" means on the same default. A borrower who defaults in one or more installment payments may be subject to one past-due fee as specified in 32-5-301, MCA, for each installment payment on which the borrower defaulted.

(1) A consumer loan licensee may not sell, solicit, or negotiate insurance or act as an insurance producer or insurance agency in this state unless licensed under Title 33, chapter 17, MCA. A consumer loan licensee holding an insurance producer or insurance agency license shall conspicuously display the insurance license in its main consumer loan office and shall comply with all applicable provisions of the Montana Insurance Code, Title 33, MCA.

(2) A licensee may not require any borrower or prospective borrower to purchase or contract for credit life insurance, credit disability insurance, or loss of income insurance as a condition precedent to granting any loan.

(3) A licensee may advise borrowers or prospective borrowers or advertise generally and publicly that credit life insurance, credit disability insurance, and loss of income insurance are available at additional cost to the borrower on loans meeting the requirements of (4).

(4) A licensee may not place credit life insurance, credit disability insurance, or loss of income insurance on any loan of $300 or less in principal amount exclusive of charges for insurance premiums.

(5) The amount and term of credit life insurance, credit disability insurance, or loss of income insurance placed by a licensee must conform to the provisions of 33-21-202 and 33-21-203, MCA.

(6) The individual insurance policy, the certificate of group insurance, the copy of the application for insurance, or the notice of proposed insurance, must be delivered to the borrower at the time the indebtedness is incurred and statements concerning the coverage provided must comply with 33-21-204, MCA.

(7) A licensee must have on file for each credit life insurance, credit disability insurance, and loss of income insurance transaction a signed statement from the borrower that procurement of the insurance was not made a condition precedent to the granting of the loan. The statement may be a part of the loan statement, certificate of group insurance, or application for insurance, if the document is retained in the borrower's loan file for the two-year period required by 32-5-307, MCA. If a separate signed statement is used, the statement must be retained in the borrower's loan file for the same period. 

(8) Refunds of unearned premiums for credit life insurance, credit disability insurance, and loss of income insurance must be made in accordance with the Montana Insurance Code (33-21-206, MCA).

(9) A licensee shall enter on each borrower's loan account record the amount of credit life, credit disability, or loss of income insurance premium charged in connection with the loan.

(10) Before any credit life insurance, credit disability insurance, or loss of income insurance premium is placed by a consumer loan licensee on any loan contract, the licensee must file with the department a statement containing the following information:

(a) the name and home address of the insurer or insurers with whom licensee intends to place such insurance;

(b) the rate of charge for premiums on the insurance to be collected from the borrower, expressed in terms of dollars and cents per month (or per year) per one hundred dollars of original balance of the loan;

(c) borrower eligibility criteria for credit life insurance, credit disability insurance, and loss of income insurance; and

(d) the basis or schedule upon which refunds to borrowers of unearned premiums are to be computed consistent with the refund formula filed with and approved by the Commissioner of Insurance under 33-21-206(2), MCA.

(11) For the purpose of providing adequate information for the annual report required by 32-5-308, MCA, a licensee shall keep accurate accounts to reflect the following:

(a) total net charges to borrowers for credit life, credit disability, and loss of income insurance placed by the licensee;

(b) total premiums remitted to insurers for the coverage;

(c) total commissions or dividends received by licensee from insurers;

(d) total of loans and loan balances paid by insurers under credit life policies upon death of borrowers;

(e) total of loans and payments received from insurers on loans under credit disability policies; and

(f) total of loans and payments received from insurers on loans under loss of income policies.

(12) The insurance information required under (11) must be reported in the aggregate in the licensee's annual report and must also be broken down by loan and maintained in each individual loan file.

(1) A licensee who collects a fee to be paid to a public official for filing or recording any instrument used to secure a loan shall file or record the security instrument. A licensee who has filed or recorded a security instrument shall release the security instrument from the public record within ten business days after the obligation has been satisfied whether or not a fee was collected for the filing or recording of the security instrument in the first instance or for the filing or recording of the release.

(2) Licensees shall record on the borrower's ledger card or electronic payment record each amount collected as a fee for recording, filing, or releasing any instrument executed by a borrower to secure a loan. The electronic record must be capable of being reproduced in or converted to hard copy form.

(3) Licensees may not charge a fee to notarize any instrument tendered by a borrower as security for the consumer loan. The prohibition does not affect the authority of a licensee to finance the fee charged by a third party for notary services under 32-5-301(2), MCA.

(1) Licensees shall give to the borrower or mail to the borrower's address a plain and complete receipt for each payment made.

(2) Licensees receipt forms shall contain the following minimum information:

(a) name of borrower;

(b) account number;

(c) amount and date of payment;

(d) past-due amount collected, if any;

(e) balance remaining on loan; and

(f) amount of refund.

(3) Licensees shall indelibly record on the borrower's loan card, or electronically maintain, as separate items the amount of each installment payment, refund, or collection. An electronic record must be capable of being reproduced in or converted to hard copy form.

(1) Each licensee shall continuously maintain a record of the current total of Montana consumer loan notes receivable that were originated at or from each of the licensee's licensed business locations. The original source documents supporting the total must be available for examination by the department at that licensed business location or submitted to the department at the department's direction.

This rule has been repealed.

(1) The examination fee charged by the department to the examinee must be in an amount sufficient to recover all of the department's actual costs for its supervision program related to the subject examination.

(2) The term "actual costs" means the "hourly cost of employee" for each examiner performing the examination plus actual travel expenses incurred in conjunction with the examination.

(3) The term "hourly cost of employee" means the cost incurred by the department for each hour that an employee is performing the examination; the cost includes the employee's wages and benefits.

(4) The term "performance of an examination" or "performing an examination" means pre-examination preparation, travel time, examination, examination report writing, review of a licensee's response to the examination report, and, if appropriate, amending the report based on the licensee's response.

(5) The term "travel expenses" means the "hourly cost of employee" for each examiner's travel time; motor pool and fuel charges; airfare, cab, or other public transportation fare; lodging; per diem; and, if approved by the department in advance, charge for rental vehicle for use at the examination site. The term also includes mileage paid to an examiner under 2-18-503, MCA, for use of personal vehicle for examination travel if use of the personal vehicle was approved by the department in advance.

(1) The written notice required under 32-5-207(1), MCA, constitutes process under the Montana Administrative Procedure Act, Title 2, chapter 4, part 6, MCA. The mailing of the notice to a person by certified mail under 32-5-207(2), MCA, constitutes effective "service of process" if a return receipt signed by the recipient, who need not be the same person as the addressee, has been returned to and retained by the department as proof of service.

(2) If a certified mail item mailed to a person other than an individual is returned to the department marked "unclaimed" after two notices to claim the item have been given by the United States Postal Service in accordance with established procedures for certified mail, the department shall have a sheriff or other process server attempt personal service upon the person at the same address for which the certified mail item went unclaimed. If that is unsuccessful, the department may, but is not required to, attempt personal service at any other address at which the department reasonably believes the person may be found. If personal service fails, the person is deemed to have been effectively served by operation of law under 32-5-207, MCA.

(3) If a certified mail item mailed to an individual is returned to the department marked "unclaimed," then the department may attempt service on the individual at the same address by regular mail with enclosed notice and acknowledgment of service under Rule 4(d)(3), Montana Rules of Civil Procedure (M.R.Civ.P.)

(4) If a certified mail item mailed to a person is returned to the department marked "undeliverable," "left no forwarding address," "forwarding address expired," or similar basis for nondelivery, the department shall use best efforts to locate another address for the person to be served and attempt service by certified mail there. If the certified mail item mailed to a person other than an individual is returned marked "unclaimed," the procedures in (2) apply. If a certified mail item mailed to an individual is returned marked "unclaimed," the procedures in (3) apply. If the certified mail item to a person other than an individual or a certified mail item to an individual is returned marked "undeliverable," "left no forwarding address," "forwarding address expired," or similar basis for nondelivery, the person or individual is deemed to have been effectively served by operation of law under 32-5-207, MCA.

(5) For purposes of this rule, "best efforts" means efforts that are reasonable under the totality of circumstances, i.e., reasonably calculated to give actual notice to the person being served. The term does not mean that heroic or extraordinary efforts must be made or that only actual notice by perfected Rule 4, M.R.Civ.P. service must ultimately be accomplished.

(6) Where there is no proof of perfected service under this rule, the department shall consider the following circumstances in determining whether to enter a person's default:

(a) what attempts were made to perfect service;

(b) whether and to what extent perfected service is practical in any given case;

(c) whether any attempts were made to contact the person by telephone or means other than by mail;

(d) whether the department knows that the person is located at a particular place other than the address(es) at which attempted service was made; and

(e) whether the person has actual or imputed knowledge of the notice or the process or pendency of the administrative action without service having been perfected.

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx.

(2) Except as provided in ARM 2.59.312, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any consumer loan licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a consumer loan license issued by the department.

(4) All applicants for a consumer loan license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

This rule has been repealed.

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

This rule has been repealed.

This rule has been repealed.

(1) The department may decline to accept a licensee's offer to surrender a license under the following circumstances:

(a) the licensee has not fully complied with ARM 2.59.319;

(b) the licensee has not made a succession plan that adequately protects consumers related to the continued servicing of the licensee's active loan files;

(c) the licensee has not fully complied with a final order issued by the department in an enforcement action even though compliance is not yet due;

(d) the department has an outstanding complaint or a pending enforcement action against the licensee; or

(e) the licensee has not submitted an annual report covering the final calendar year or partial year that the licensee was in business irrespective of whether the licensee had any Montana loan activity during that reporting period.

(2) Once the department accepts an offer to surrender a license, the license may not be reinstated but the former licensee may reapply for a new license at any time.

This rule has been repealed.

(1) Upon expiration of a license issued under 32-5-201, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 32-5-201, MCA;

(c) a reinstatement fee of $250; and

(d) proof that the licensee continues to meet standards for licensure under 32-5-202, MCA.

(2) An expired license that is not reinstated by the last day of February under (1) is "terminated-expired" and may not be reinstated. The holder of a "terminated-expired" license may reapply as a new license applicant.

(1) An entity holding a consumer loan license for any period during a calendar year reporting period shall complete and file with the department by February 15 of the following calendar year a Consumer Loan Annual Report of Licensee (annual report). The annual report must be filed whether any loans were originated during the reporting period and whether the licensee renewed its license at the end of the reporting period or held a license when the report came due the following February 15.

(2) A completed annual report must be e-mailed to [email protected].

(3) The annual report, January 25, 2018, edition, is adopted and incorporated by reference and available on the division's website at banking.mt.gov.

(1) At least 60 days before the intended closure date of a consumer loan business, the licensee shall provide the following to the department:

(a) a copy of a notification to all consumers with outstanding loans containing:

(i) a current outstanding loan balance including an itemization of unpaid principal, accrued interest, and allowable fees;

(ii) notice of intended closure date of the business which date shall not be sooner than 60 days from the date of mailing the notice;

(iii) the licensee's succession plan, e.g., sale or assignment of the loan, and the successor's contact information and assumption letter;

(iv) any alternatives to the licensee's succession plan that are available to the consumer;

(v) contact information for borrower use in obtaining collateral/lien releases; and

(vi) the department's name, address, phone number, and e-mail address where any complaints arising from the intended closure may be filed;

(b) the name, physical address, mailing address, e-mail address, and phone numbers of the licensee's post-closure, designated custodian of the licensee's inactive loan files, and the physical address where the records will be maintained for the period required under 32-5-307, MCA; and

(c) a report of active loans containing the following information for each loan:

(i) name, address, and loan number of all active borrowers;

(ii) loan origination date;

(iii) original principal amount of loan;

(iv) current interest rate;

(v) current principal balance;

(vi) maturity date; and

(vii) summary of special provisions related to taxes and insurance reserves, funded maintenance reserves, etc.

(2) The department may conduct a final examination of the consumer loan business at the licensee's expense as provided in 32-5-403, MCA, and ARM 2.59.308 before accepting the surrender of license. The department may, in lieu of an examination, accept an audit report prepared in accordance with generally accepted accounting principles (GAAP) and/or United States generally accepted audit standards (GAAS) by an independent auditor retained by the licensee for the disclosed purpose of closing or selling the business, as applicable. 

(1) The department's "costs in bringing an administrative action" as used in 32-5-207, MCA, for which reimbursement may be ordered by the department are:

(a) administrative law judge charges;

(b) court reporter fees;

(c) exhibit preparation costs if the exhibit was admitted into evidence at the hearing;

(d) the cost of a deposition if the deposition was used at the hearing;

(e) fees, if any, for service of subpoenas;

(f) transcription cost as provided in 2-4-614, MCA;

(g) witness fees and mileage for the department's lay/fact witnesses; and

(h) mileage for the department's expert witness if the expert appears personally and testifies at the hearing. 

(1) The division invoices credit unions for semiannual assessments. The assessment is based on each credit union's total assets provided in its previous March and September financial performance reports.

(2) The fee is calculated based on the total assets of the credit union multiplied by .0000375, plus the flat fee listed in the table below.

Example: Credit Union A reports total assets of $36,169,980 x .0000375 plus $0 equals $1,356.37.

(3) The assessment is due 30 days after each invoice date, or July 31 and January 31, whichever is later.

(4)  The assessment billed in December 2022 and collected in January 2023 is waived. 

(1) A limited income person is defined as an individual whose annual income is less than that specified below based upon family size:

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For family/household units with more than eight members, add $4,160 for each additional member.

(2) For purposes of this rule, the term "income" must include before-tax income of the following types:

(a) earnings (wages, tips, and salary);

(b) unemployment compensation;

(c) workers' compensation;

(d) social security;

(e) supplemental security income;

(f) survivor benefits;

(g) pension or retirement income; and

(h) self-employment earnings computed in accordance with the credit union's written policies.

(3) Other forms of income that may, at the credit union's discretion and in accordance with the credit union's written policies, be included within the definition of income for purposes of this rule are:

(a) cash public assistance benefits;

(b) veterans' payments;

(c) interest income;

(d) dividend income;

(e) rents;

(f) royalties;

(g) income from estates or trusts;

(h) educational assistance such as work-study earnings and grants, but not student loans;

(i) spousal maintenance (formerly known as alimony);

(j) child support;

(k) assistance from outside the household; and

(l) other miscellaneous sources.

(4) The term "income" does not include:

(a) capital gains or losses; and

(b) noncash benefits such as food stamps and housing subsidies.

(5) Credit union membership for immediate family members of persons within the credit union's field of membership under 32-3-304(2), MCA, does not extend to immediate family members of limited income persons who become members under 32-3-307, MCA. Nothing in this rule prevents immediate family members of limited income persons from independently qualifying for membership in their own right under either 32-3-304 or 32-3-307, MCA.

(2) Each credit union shall obtain casualty insurance, fire insurance, liability insurance or such other types of insurance as may be appropriate to the credit union's needs.

(3) Surety bond coverage and insurance coverage shall be in amounts appropriate to the total assets of the credit union, the nature of its business, and the value of its insured property. In no case shall the amounts of coverage be less than those required of federal credit unions by the National Credit Union Administration.

This rule has been repealed.

(1) Credit unions are required to retain records of member accounts, as defined in (7),for at least eight years after January 1 of the year following the time that the records are made; however, records showing unpaid balances in favor of members may not be destroyed.

(2) The publication Montana Credit Union Records Retention Schedule, Appendix A to ARM 2.59.405 (Appendix A), establishes the minimum retention period for records other than member account records for all state-chartered credit unions. Appendix A is maintained by the Commissioner of Banking and Financial Institutions, and may be updated not more than once a year by the commissioner. The August 11, 2014, edition of Appendix A is incorporated by reference as part of this rule. A copy of Appendix A can be obtained from the Division of Banking and Financial Institutions, Department of Administration, 301 South Park, P.O. Box 200546, Helena, MT 59620-0546 or found on the department's web site at

(3) When a credit union microfilms, photographs, or uses other electronic or computer-generated data records in the regular course of business, the retention period of the microfilm, photographs, electronic, or computer-generated data must be the same as specified in Appendix A.

(4) Credit unions must comply with all applicable federal laws and regulations concerning credit union records retention requirements. In the event that an applicable federal law or regulation conflicts with a retention period contained in this rule or in Appendix A, a credit union must comply with whichever retention period is longer. Credit unions must comply with other applicable state laws governing retention of personnel records, corporation records, etc.

(5) If a credit union does not maintain records set forth in Appendix A, but maintains similar records with equivalent information, the credit union's similar records must be retained for the time specified within Appendix A.

(6) Records not covered by this rule, Appendix A, or applicable federal laws and regulations must be retained for a period of time determined appropriate by the credit union's board of directors. The board's minutes must reflect the record retention periods determined appropriate and be maintained as a permanent part of the board's minutes.

(7) "Member accounts" for record retention purposes means member deposit accounts including share savings accounts, share draft accounts, share certificates, safety deposit boxes, trust accounts, negotiable orders of withdrawal (NOW) accounts, and money market deposit accounts.

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The following definitions apply in ARM 2.59.407 through 2.59.414:

(1) "Actuarial method" means the method of allocating payments made on a debt between the amount financed and the finance charge. Under this method, a payment is applied first to the accumulated finance charge and any remainder is subtracted from, or any deficiency is added to, the unpaid balance of the amount financed.

(2) "Contract" means a debt cancellation contract or a debt suspension agreement.

(3) "Debt cancellation contract" means a loan term or contractual arrangement modifying loan terms under which a credit union agrees, for a fee, to cancel all or part of a member's obligation to repay an extension of credit from that credit union upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The agreement may be separate from or a part of other loan documents. A debt cancellation contract may be offered and purchased either contemporaneously with the other terms of the loan agreement or subsequently. The extension of credit to which it pertains may be a direct loan made by the credit union or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the credit union. In the case of an indirect loan in the form of a retail installment sales contract, the debt cancellation contract may be offered by the credit union through a nonexclusive, unaffiliated agent contingent upon the credit union purchasing or taking assignment of the indirect loan.

(4) "Debt suspension agreement" means a loan term or contractual arrangement modifying loan terms under which a credit union agrees, for a fee, to suspend all or part of a member's obligation to repay an extension of credit from that credit union upon the occurrence of a specified event. The agreement must specify the extension of credit to which it pertains. The agreement may be separate from or a part of other loan documents. The term "debt suspension agreement" does not include loan payment deferral arrangements in which the triggering event is the member's unilateral election to defer repayment or the credit union's unilateral decision to allow a deferral of repayment. The extension of credit may be a direct loan made by the credit union or an indirect loan in the form of a retail installment sales contract purchased by or assigned to the credit union. In the case of an indirect loan in the form of a retail installment sales contract, the debt suspension agreement may be offered by the credit union through a nonexclusive, unaffiliated agent contingent upon the credit union purchasing or taking assignment of the indirect loan.

(5) "Guaranteed asset protection (GAP) waiver or agreement" means a term of an extension of credit or contractual arrangement modifying terms of an extension of credit for the purchase of titled personal property under which a credit union agrees to cancel the member's obligation to repay the portion of the extension of credit that exceeds the amount paid by the primary insurer of the titled personal property upon the insurer's declaration that the titled personal property is a total loss or determination that the titled personal property is stolen and not recoverable.

(6) "Loan" or "extension of credit" means a direct or indirect advance of funds to a member made on the basis of any obligation of that member to repay the funds or that is repayable from specific property pledged by or on the member's behalf. The term also includes any liability of a credit union to advance funds to or on behalf of any member under a contractual commitment.

(7) "Member" means an individual who obtains from a credit union an extension of credit that is primarily for personal, family, or household purposes. In the case of a credit union serving low income individuals, a qualifying nonmember is considered a "member." For purposes of this subchapter, the term means the same thing as borrower.

(8) "Residential mortgage loan" means a loan for personal, family, or household purposes secured by a one- to four-family residential property.

(1) A credit union offering debt cancellation contracts and/or debt suspension agreements shall:

(a) manage the risks associated with debt cancellation contracts and debt suspension agreements in accordance with credit union safety and soundness principles by establishing and maintaining effective risk management and control processes over its debt cancellation contracts and debt suspension agreements to include:

(i) appropriate recognition and financial reporting of income, expenses, assets, and liabilities;

(ii) appropriate treatment of all expected and unexpected losses associated with the contracts; and

(iii) assessment of the adequacy of its internal control and risk mitigation activities in view of the nature and scope of the credit union's debt cancellation and debt suspension program; and

(b) obtain and maintain in effect insurance from an insurer authorized or otherwise registered with the State Auditor and Commissioner of Insurance (State Auditor) to do business in Montana, except as provided in (2). The insurance must cover 100% of the at-risk loan balances to which the credit union's debt cancellation contracts pertain.

(2) An insurer authorized by the insurance regulator in an out-of-state credit union's home state that has issued a policy to the out-of-state credit union covering all of its debt cancellation contractual liabilities need not be authorized or otherwise registered with the State Auditor.

(1) A credit union shall provide the following disclosures to the credit union's member:

(a) notice of the prohibited acts or practices contained in ARM 2.59.409;

(b) the fee applicable to the contract and any payment options;

(c) the refund;

(d) whether the member is barred from using the credit line to which it pertains if the debt cancellation contract or debt suspension agreement is activated;

(e) eligibility requirements, conditions, and exclusions;

(f) that a debt suspension agreement, if activated, does not cancel the debt, but only suspends payment requirements; and

(g) notice that cancellation of debt may result in a tax liability to the member if activated.

(2) The requirements for the timing and method of disclosure are:

(a) the credit union shall make the disclosures in (1) and the short-form disclosures under ARM 2.59.413 orally at the time the credit union first solicits the purchase of a contract;

(b) the credit union shall make the long-form disclosures under ARM 2.59.413 in writing before the member completes the purchase of the contract. If the initial solicitation occurs in person, the credit union shall provide the long-form disclosure in writing at that time;

(c) if the contract is solicited by telephone, the credit union shall provide the disclosures in (1) and the short-form disclosures under ARM 2.59.413 orally and shall mail the long-form disclosures, and if appropriate, a copy of the contract, to the member within three business days beginning on the first business day after the telephone solicitation; and

(d) if the contract is solicited through written materials such as mail inserts or "take one" applications, the credit union may provide only the disclosures in (1) and the short-form disclosure under ARM 2.59.413 to the member within three business days beginning on the first business day after the member contacts the credit union in response to the solicitation, subject to the requirements of ARM 2.59.412(3)(b).

(3) The disclosures required by these rules must be conspicuous, simple, direct, readily understandable, and designed to call attention to the nature and significance of the information provided. The methods may include use of plain language headings, easily readable typeface and size, wide margins and ample line spacing, boldface or italics for key words, and/or distinctive type style or graphic devices.

(4) The disclosures in the short-form disclosure under ARM 2.59.413 are required in advertisements and promotional material for contracts unless the advertisements and promotional materials are of a general nature describing or listing the services or products offered by the credit union.

(5) The disclosures described in these rules may be provided through electronic media in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq. or the Uniform Electronic Transaction Act, Title 30, chapter 18, part 1, MCA.

(1) A credit union is prohibited from engaging in any of the following acts or practices:

(a) extending credit or altering the terms or conditions of an extension of credit conditioned upon the member entering into a debt cancellation contract or debt suspension agreement with the credit union. The prohibition is commonly referred to in the regulatory context as the anti-tying provision;

(b) engaging in any practice or using any advertisement that could mislead or otherwise cause a reasonable person to reach an erroneous belief with respect to information that must be disclosed under ARM 2.59.408, including what is being offered, the cost, and/or the terms of the contract;

(c) offering debt cancellation contracts or debt suspension agreements that contain terms:

(i) giving the credit union the right unilaterally to modify the contract unless:

(A) the modification is favorable to the member and is made without additional charge to the member; or

(B) the member is notified of any proposed change and is provided a reasonable opportunity to cancel the contract without penalty before the change goes into effect; or

(ii) requiring an up-front, lump-sum single payment for the contract if the extension of credit to which the contract pertains is a residential mortgage loan.

(1) If a debt cancellation contract or debt suspension agreement is terminated, including, for example, when the member prepays the covered loan, a credit union shall refund to the member any unearned fees paid for the contract unless the contract provides otherwise.

(2) A credit union may offer a member a contract that does not provide for a refund only if the credit union also offers that member a bona fide option to purchase a comparable contract that provides for a refund.

(3) A credit union shall calculate the amount of a refund using a method at least as favorable to the member as the actuarial method.

(1) Except as provided in ARM 2.59.409(1)(c)(ii), a credit union may offer a member the option of paying the fee for a debt cancellation contract or a debt suspension agreement in a single payment, provided the credit union also offers the member a bona fide option of paying the fee for that contract in periodic installment payments.

(2) If a credit union offers the member the option to finance the single payment by adding it to the loan principal, the credit union must also disclose, in accordance with ARM 2.59.410, whether the member may cancel the agreement and receive a refund, and, if so, the time period during which the member may do so.

(1) Before entering into a debt cancellation contract or debt suspension agreement, a credit union shall obtain the member's written affirmative election to purchase the contract and a written acknowledgment of receipt of the disclosures required under ARM 2.59.408.

(2) The election and acknowledgment information must be conspicuous, simple, direct, readily understandable, and designed to call attention to its significance.

(3) The election and acknowledgment information satisfies these standards if it conforms to the following requirements:

(a) if the sale of a contract occurs by telephone, the member's affirmative election to purchase may be made orally, provided that the credit union:

(i) maintains sufficient documentation to show that the member received the short-form disclosures substantially similar to ARM 2.59.413(1) and then affirmatively elected to purchase the contract;

(ii) mails to the member the affirmative written election and written acknowledgment together with a long-form disclosure substantially similar to ARM 2.59.413(2), within three business days after the telephone solicitation, and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the member; and

(iii) permits the member to cancel the purchase of the contract without penalty within 30 days after the credit union has mailed the long-form disclosures to the member; or

(b) if the contract is solicited through written materials such as mail inserts or "take one" applications and a credit union provides only the short-form disclosures in the written materials, then the credit union shall mail the acknowledgment of receipt of disclosures, together with a long-form disclosure as provided under ARM 2.59.413(2), to the member within three business days, beginning on the first business day after the member contacts the credit union or otherwise responds to the solicitation. A credit union may not obligate the member to pay for the contract until after the credit union has received the member's written acknowledgment of receipt of disclosures unless the credit union:

(i) maintains sufficient documentation to show that the credit union provided the acknowledgment of receipt of disclosures to the member;

(ii) maintains sufficient documentation to show that the credit union made reasonable efforts to obtain from the member a written acknowledgment of receipt of the long-form disclosures; and

(iii) permits the member to cancel the purchase of the contract without penalty within 30 days after the credit union has mailed the long-form disclosures to the member.

(4) The affirmative election and acknowledgment may be made electronically in a manner consistent with the requirements of the Electronic Signatures in Global and National Commerce Act, 15 USC 7001 et seq. or the Uniform Electronic Transaction Act, Title 30, chapter 18, part 1, MCA.

(1) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model short-form disclosure at 12 CFR 37 Appendix A revised as of January 1, 2010. The form must be adapted by the credit union to include the disclosures required under ARM 2.59.408(1)(a) and (g).

(2) The department adopts as a model, but not as a requirement, the Comptroller of the Currency's model long-form disclosure at 12 CFR 37 Appendix B revised as of January 1, 2010. The form must be adapted by the credit union to include the disclosures required under ARM 2.59.408(1)(a) and (g).

(3) The model forms in (1) and (2), which are available at Title 12, Volume I, Part 37, Appendices A and B in the Code of Federal Regulations, are not mandatory, but a credit union that provides disclosures in a form substantially similar to the adapted model forms will be deemed to have satisfied the disclosure requirements applicable to the credit union concerning its debt cancellation and/or debt suspension program.

(1) A GAP waiver or agreement is a type of debt cancellation contract. A debt cancellation contract with a GAP feature offered in connection with an extension of credit for the purchase of titled personal property for personal, family, or household use is a single product. A credit union offering a debt cancellation contract with a GAP feature may do so through nonexclusive, unaffiliated agents such as automobile dealers. The fee arrangement between a credit union and a nonexclusive, unaffiliated agent through which the debt cancellation product is offered does not create a separate contract that violates the anti-tying provision of ARM 2.59.409(1)(a).

(1) The supervisory committee shall:

(a) verify that adequate internal controls are established and maintained to safeguard the credit union's assets;

(b) oversee the inspection of securities, cash, and accounts of the credit union;

(c) review credit union operations and monitor its overall financial condition on an ongoing basis;

(d) review the actions of the board of directors, officers, and committees to ensure that the individuals and entities:

(i) exercise firm control over the credit union's affairs;

(ii) understand their role; and

(iii) promote the credit union for its intended purposes;

(e) ensure that the credit union complies with all applicable laws and regulations;

(f) review all new policies and changes to credit union procedures and assess their effects on the safety of members' funds; and

(g) understand, support, and monitor compliance programs related to the Bank Secrecy Act of 1970 and the Money Laundering Control Act of 1986.

(1) For purposes of ARM 2.59.417, 2.59.418, and 2.59.422, "net worth" means the sum of regular reserves and undivided earnings. Net worth excludes the allowance for loan and lease losses. Net worth is calculated quarterly based on data from the previous call report.

(2) The department shall determine compliance with ARM 2.59.417, 2.59.418, and 2.59.422 using quarterly net worth for the period in which the security is purchased.

(3) A security that complies with ARM 2.59.417, 2.59.418, and 2.59.422 at the time of purchase is not in violation of ARM 2.59.417, 2.59.418, and 2.59.422 at a later date due to a subsequent decline in net worth.

(1) Certain other securities are approved for credit union investment. There is no dollar limit on a credit union's investment in:

(a) General Services Administration (participation certificates);

(b) Maritime Administration (bonds and notes); and

(c) Washington Metropolitan Area Transit Authority (bonds).

(2) A credit union's investment is limited to 50 percent of its net worth in:

(a) Asian Development Bank (bonds and notes);

(b) Financing Corporation (FICO) (bonds);

(c) Inter-American Development Bank (bonds);

(d) Resolution Funding Corporation (REFCORP) (bonds);

(e) Tennessee Valley Authority (TVA) (bonds); and

(f) World Bank (bonds and notes).
 

(1) A credit union may invest up to 20 percent of its net worth, per issuer, in corporate bonds.

(2) These bonds must be investment grade, i.e., rated in one of the four highest grades by a recognized national investment rating organization.

(3) Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the credit union's investment policy.

(4) Corporate bonds must be reviewed as necessary to assure the credit union's board of directors that bond quality has not fallen below investment grade.

(1) Under the authority of 32-3-701, MCA, and subject to its restrictions, a credit union may invest in mutual funds whose shares represent only those United States obligations listed in ARM 2.59.417.

(2) Shareholders must have a proportionate undivided interest in any mutual fund utilized under this rule.

(3) Shareholders must be shielded from personal liability for acts or obligations of the mutual fund.

(4) The credit union's investment policy, as formally approved by its board of directors, must specifically provide for such investments. Prior approval of the board of directors must be obtained for initial investments in specific mutual funds and recorded in the official board minutes. Procedures, standards, and controls for managing such investments must be implemented prior to the investment being made.

(1) A credit union may invest, without dollar limitation, in the general obligations of:

(a) any state of the United States if the obligations are fully guaranteed as to the repayment of principal and interest. Evidence of a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the state responsible for repayment of the general obligation; and

(b) any Montana political subdivision if:

(i) the obligations are issued pursuant to the Constitution, statute, or the charter or ordinances of the respective county or city;

(ii) the obligations are fully guaranteed as to the repayment of principal and interest. Evidence of a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the Montana political subdivision responsible for repayment of the general obligation; and

(iii) the issuing body has not been in default regarding the payment of principal or interest on any of its obligations within five years preceding the date of the investment.

This rule has been transferred.

(1) Credit unions may invest, without limitation, in revenue bonds issued by the state of Montana or its political subdivisions.

(2) Credit unions may invest up to 40 percent of their net worth, per issuer, in revenue bonds issued by any other state or its political subdivisions whereby the obligations are payable from pledged fee or tax revenue from designated sources.

(a) The issuing body must not have been in default regarding the payment of principal or interest on any of its obligations within five years preceding the date of the investment.

(b) The obligations must be rated investment grade or higher by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the credit union's investment policy.

(3) Credit unions may invest up to 20 percent of their net worth, per issuer, in industrial development revenue obligations issued by a Montana political subdivision when repayment is dependent upon a nongovernmental obligor and when such issues are consistent with the commercial lending policy of the credit union.
 

(1) The department adopts by reference the model bylaws of credit unions dated June 2020 and the model credit union bylaws statutory reference dated June 2020, to be used by incorporators when they want to start a new credit union. Both can be found on the department's web site at www.banking.mt.gov.

(1) Training topics and course selection for directors' training must reflect the size and complexity of the business model of the credit union that the directors serve and the depth of understanding needed by the directors to effectively manage the credit union. The training must ensure directors achieve at least the minimum level of competency to enable the directors to exercise appropriate independent business judgment to complement the expertise and business judgment of the credit union's executive officers in matters within the board's authority.

(1) All Montana state-chartered credit unions insured by a private share insurance plan pursuant to 32-3-611, MCA, are regulated the same as Montana state-chartered credit unions insured under the provisions of Title II of the Federal Credit Union Act.

(1) An applicant seeking to organize a new state-chartered credit union shall complete the Application for a Certificate of Approval to Organize a New Montana Credit Union dated December 14, 2020, which is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

(1) The Report of Credit Union Management form dated December 14, 2020, is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

(2) The Liabilities of Directors and Committee Members form dated December 14, 2020, is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(a) The investment in shares of or loans to the agricultural credit corporation by a bank shall be limited to two times the legal lending limit of the bank, i.e., 40% of the bank's unimpaired capital and surplus plus 40% of the outstanding debentures or capital notes issued under the authority of 32-1-413 , MCA.

(b) Any loan or series of loans made to one borrower by the agriculture credit corporation (corporation) shall not exceed the lending limit of the bank.

(c) The directors of the corporation shall execute a resolution or adopt a bylaw which makes available all of the records of the corporation to the commissioner of financial institutions of Montana and his examining personnel without restriction.

(2) A bank operating under the laws of Montana may invest in an agricultural credit corporation owned by two or more investors under the same conditions listed in (1) if the bank owns 80% or more of the outstanding stock of the corporation. A bank owning less than 80% of the stock of the corporation must limit its investment to its statutory lending limit under the Montana Code Annotated and must follow the conditions in (b) (c) above.

(3) Any bank operating under the laws of Montana shall notify the commissioner of financial institutions of its intentions to invest in an agriculture credit corporation. If the bank does not receive from the commissioner within 30 days after he has received the above notice, a statement disapproving the investment for stated reasons, the bank may proceed with the investment in the agriculture credit corporation.

(4) For the purpose of this rule, an agricultural credit corporation is defined as a corporation organized to make available to banks the right to sell or rediscount loans available through the federal intermediate credit bank or any government agricultural lender.

(5) For the purpose of this rule, a loan means extensions of credit to agricultural producers or agribusinesses which are eligible for rediscount or sale to the federal intermediate credit bank or other government agency.

(1) In addition to the statutory qualifications found in Title 32, chapter 7, MCA, officers and managers of proposed escrow businesses shall demonstrate the character and fitness to operate their proposed escrow businesses in compliance with all applicable state and local laws.

(2) The director, the commissioner of banking and financial institutions, and examining personnel of the banking and financial institutions division may gather all available information relative to applications and conduct such investigations as they may determine are warranted to verify the qualifications of the applicant.

(3) An application fee of $350 shall be paid to the state of Montana at the time of application, and thereafter shall not be refundable either in whole or in part.

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx.  

(2) Except as provided in ARM 2.59.707, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any escrow business licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold an escrow business license issued by the department.

(4) All applicants for an escrow business license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

This rule has been repealed.

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) Upon expiration of a license issued under 32-7-110, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 32-7-110, MCA;

(c) a reinstatement fee of $50; and

(d) proof that the licensee continues to meet standards for licensure under 32-7-109, MCA.

(2) An expired license that is not reinstated by the last day of February under (1) is "terminated-expired" and may not be reinstated. The holder of a "terminated-expired" license may reapply as a new license applicant.

(1) The Montana Escrow Business Annual Financial Statement and Escrow Activities Report form, May 9, 2017, edition, is adopted and incorporated by reference. The form is available on the division's website, https://banking.mt.gov/Home/Forms.

(2) By April 30 each year, persons licensed under the Montana Regulation of Escrow Businesses Act shall file the Montana Escrow Business Annual Financial Statement and Escrow Activities Report as of December 31 of the preceding calendar year.

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This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

For purposes of this subchapter, the following definitions apply:

(1) "Consolidate" means a combination of two or more office locations within the same immediate neighborhood that does not substantially affect the nature of the business or customers served. Thus, for example, a consolidation of two branches on the same block following a merger would not constitute a branch closing. Banks that are in doubt about whether a consolidation or a closing has occurred should consult the department. A consolidation is considered a relocation for purposes of ARM 2.59.903 and 2.59.907.

(2) "Customer" means a person who opened an account at the branch location in question, is currently associated with that branch, or whose address is within the same municipal area as the branch, as the bank determines is appropriate.

(3) "Principal city" means an area designated as a "principal city" by the federal Office of Management and Budget.

(4) "Relocate" means a movement within the same immediate neighborhood that does not substantially affect the nature of the business or customers served. Generally, relocations involve movement over a short distance.

(5) "Short distance" means:

(a) within a 1,000-foot radius of the current location of the branch if it is located within the principal city of a metropolitan statistical area (MSA);

(b) within a one-mile radius of the current location of the branch if the branch is not located within a principal city, but is within an MSA; or

(c) within a two-mile radius of the branch if it is not located in an MSA.

(1) A bank that desires to establish a loan production office in this state shall provide written notice to the department of its intent to do so at least thirty days prior to opening the loan production office using the Notice of Intent to Establish a Loan Production Office form dated June 29, 2020, located at www.banking.mt.gov.

(2) A bank organized under the laws of Montana that intends to open a loan production office in another state shall submit copies of all required regulatory filings or notices required by the host state and federal agencies along with the items required in the Notice of Intent to Establish a Loan Production Office form, if they are not already included in the form, to the department.

(3) A Montana state-chartered bank that desires to relocate or close a loan production office temporarily or permanently shall give notice to its customers using the customer Notice of Relocation form dated June 29, 2020, or customer Notice of Closure form dated June 29, 2020, located at www.banking.mt.gov.

(4) The relocation or closure form shall be provided to customers of the loan production office by posting it at the loan production office at least fifteen days before the relocation or closure of the office. The relocation or closure form shall be provided to the department at the same time.

(5) The department reserves the right to request additional information regarding opening, closing, or relocation of a loan production office.

(6) If the loan production office will be using an assumed name, compliance with 32-1-402, MCA, is required.

(7) Each loan production office shall be subject to examination and supervision by the department in the same manner and to the same extent as the bank.

(8) Each loan production office operating in Montana as of the effective date of this rule, shall provide written notice to the department containing the information required in (1) on or before October 1, 2020.

(1) A bank organized under the laws of this state that is a qualifying institution, as set forth in (2), may establish a branch in Montana upon summary notice and approval by the department. The notice shall be given using the Request for Summary Approval of Branch form dated June 29, 2020, which is located at www.banking.mt.gov.

(2) In order to qualify for summary notice, the bank shall:

(a) have received its bank charter at least five years prior to making the request;

(b) be well-capitalized as defined in 12 CFR Part 324 by the Federal Deposit Insurance Corporation, if the bank is a nonmember bank; or as defined in 12 CFR 208.43(b)(1) by the Federal Reserve Board of Governors, if the bank is a member bank of the Federal Reserve System;

(c) have received a CAMELS composite rating of one or two on its most recent state or federal safety and soundness examination;

(d) have received a management rating of one or two on its most recent state or federal regulatory examination; and

(e) not be a party to any formal or informal enforcement action initiated by a state or federal regulatory agency.

(3) The bank shall certify that it is a qualifying institution as of the date of the request.

(4) A bank that is not a qualifying institution as of the date of the request shall comply with ARM 2.59.1101 and 2.59.1103.

(5) The department shall approve or deny a summary notice and application within 15 business days of receipt of a complete notice and application.

(1) In order for a bank organized under the laws of this state to request approval for a branch outside of Montana, the bank must submit copies of all required regulatory filings or notices required by the host state and federal agencies and comply with ARM 2.59.904 and the branching requirements of the state into which it seeks to branch.

(1) Banks organized under the laws of a state other than Montana or a national bank must submit copies of all required regulatory filings or notices required by the home state and federal agencies and comply with ARM 2.59.904 in order to branch into Montana. 

(1) A Montana state-chartered bank that desires to relocate or close a branch temporarily or permanently shall give notice to its customers using the customer Notice of Relocation form dated June 29, 2020, or customer Notice of Closure form dated June 29, 2020. The forms are located at www.banking.mt.gov. A bank may amend the form as needed or include additional information in the form as appropriate.

(2) The relocation or closure form shall be provided to customers of the branch by posting it at the branch at least thirty days before the relocation or closure of the branch. The relocation or closure form shall be provided to the department at the same time. The bank shall also notify its customers at least thirty days before the relocation or closure, by any effective method.

(3) The department reserves the right to request additional information regarding closing or relocation of a branch.

(1) A bank that closes a branch under the authority of 32-1-563(1), MCA, for 48 hours or less shall notify the department using the Temporary Emergency Branch Closure form dated April 10, 2019, located at www.banking.mt.gov. 

(1) A bank that closes a branch under the authority of 32-1-563(1), MCA, for more than 48 hours shall notify the department using the Emergency Branch Closure form dated April 17, 2019, located at www.banking.mt.gov.

(1) A loan production office may conduct any of the following activities, which shall not, individually or collectively, cause the loan production office to be considered a branch, as defined in 32-1-109, MCA:

(a) solicit loans on behalf of the bank or a branch of the bank;

(b) assemble credit information;

(c) make property inspections and appraisals;

(d) secure title information;

(e) prepare applications for loans, including making recommendations with respect to action; and

(f) solicit investors to purchase loans from the bank and to contract with the bank for servicing of such loans.

(2) A bank shall not accept deposits or loan payments, originate deposits or savings or checking accounts, approve loans, or disburse loan funds at a loan production office established pursuant to this rule.

(1) The application to merge one or more banks located in Montana or to merge two or more banks doing business in this state must be in the following form:

BANK MERGER APPLICATION

Any individual or entity desiring confidential treatment of specific portions of the application shall specifically identify the information for which they request confidentiality, separately bind it, and label it "Confidential." The individual or entity shall follow the same procedure for a request for confidential treatment for the subsequent filing of supplemental information to the application. Inquiries concerning the preparation and filing of this or any other application with the department should be directed to the Montana Division of Banking and Financial Institutions, P.O. Box 200546, Helena, MT 59620-0546.

1. State the exact corporate name and address of each bank and holding company participating in the merger, the name and address of every bank whose stock is owned by a participating bank holding company, the percentage of total voting stock which that holding represents, and the proposed names of the resultant bank and holding company.

2. State the name and address of, and the dates of publication in, the newspapers in which the required notice is published.

3. For the resultant bank, a list of the names of the directors and principal executive officers, their titles, and shares owned in the participating institutions and the resultant bank, including a brief resume of the educational background, banking experience, and other qualifications of each and explanation of the extent of common ownership, direct or indirect, or common management of the participating institution and the length of time such common ownership or management has existed.

4. The date on which the proposed merger is to occur.

5. Attach the following documents:

(a) the resolution or an authentic copy of the resolution, authorizing the merger adopted by a majority of the board of directors and ratified by the consent in writing of the shareholders of each bank owning at least two-thirds of its capital stock outstanding;

(b) a year-end financial statement for each participating bank and/or a consolidated statement for multi-bank holding company;

(c) a pro forma financial statement showing projected assets and liabilities, and first-year earnings for the consolidated organization; and

(d) the proposed articles of merger and plan of merger.

(2) An application fee of $2,000 plus $200 for each bank involved in the merger must be paid to the department at the time of application and may not be refunded in whole or in part.

(3) If an application is incomplete in any respect, or if additional information is required, the department shall notify the applicant and the applicant will be allowed up to 30 days in which to perfect the application or provide additional information. An extension of this 30-day period may be obtained from the department by showing good cause why it should be extended. The department may delay processing, including extending the comment period for good cause.

(4) The application must be in letter form addressed to the commissioner of the division.

(5) The department will approve or deny merger applications within 30 days of receiving a completed application.

(1) An application to merge one or more banks located in Montana pursuant to 32-1-370, MCA, must be on the form in ARM 2.59.1001.

(2) An application to merge any two or more banks doing business in this state pursuant to 32-1-371, MCA, must be on the form in ARM 2.59.1001.

(3) The application to merge must be filed with the Montana Division of Banking and Financial Institutions (division).

(4) An applicant for approval of a merger transaction shall publish notice of the proposed transaction on at least three occasions at approximately equal intervals in a newspaper of general circulation in the community or communities where the main offices of the merging institutions are located; or, if there is no such newspaper in the community, then in the newspaper of general circulation published nearest to the community.

(a) The first publication of the notice must be as close as practicable to the date on which the application is filed with the division, but no more than five days before the filing date.

(b) The last publication of the notice must be on the 25th day after the first publication; or, if the newspaper does not publish on the 25th day, on the publication date closest to the 25th day.

(5) The text of the public notice must include the following information:

(a) that an application for merger has been made to the Montana Commissioner of Banking;

(b) the name and address of all the parties to the merger;

(c) the identity of the surviving institution;

(d) that the public may submit comments to the Commissioner, Montana Division of Banking and Financial Institutions, P.O. Box 200546, Helena, Montana 59620-0546;

(e) the closing date of the public comment period; and

(f) that the nonconfidential portions of the application are on file with the division and are available for public inspection during regular business hours.

(6) The comment period must be 30 days.

(7) The notice may be combined with any notice of an applicable state or federal regulator and published jointly.

(8) Where public notice is required, the division may determine on a case-by-case basis that unusual circumstances surrounding a particular filing warrant modification of the publication requirements.

(9) The applicant(s) shall provide the affidavit(s) of publication to the division after it is received.

(1) An existing state-chartered bank that does not meet the criteria in ARM 2.59.904(2) shall file with the department an application for approval to establish and operate a new branch bank.

(2) Applications shall be submitted to the department using the Uniform Interstate Application/Notice form. Electronic submission of applications to [email protected] is preferred.

(3) The applicant shall publish its notice of intent to establish a new branch bank using the following procedure:

(a) if the application for a new branch bank also requires the approval of either the federal reserve system or the federal deposit insurance corporation, the notice shall be published at the times and in the format required by the federal agency, except that the notice shall include the following information which may be rephrased as needed: "Comments regarding this application should be forwarded in writing via email to [email protected]. Comments will also be accepted by mail addressed to the Commissioner of Banking and Financial Institutions, Department of Administration, 301 South Park, P.O. Box 200546, Helena, MT 59620-0546. The application may be reviewed, during the comment period, at the above address by calling the commissioner's office at (406) 841-2920 and requesting an appointment";

(b) if the applicant does not fall under the regulatory jurisdiction of either the federal reserve system or the federal deposit insurance corporation, or if the publication requirement of the federal regulator has been eliminated, the notice shall be published, following a format obtained from the department, in a newspaper of general circulation in the community or communities where the main office of the bank and proposed branch bank are located. If there is no such newspaper in the community, then the notice shall be published in the newspaper of general circulation published nearest thereto. Publication shall be made at least once a week on the same day for two consecutive weeks.

(4) All written comments concerning the application must be received by the department no later than 15 calendar days following the date of the last publication of the notice of intent. Comments received more than 15 calendar days after the date of the last publication will not be considered in the decision to approve or deny the application.

(5) The application shall be emailed or delivered to the department not more than ten days subsequent to the first publication of notice. 

(1) The division shall process applications for new branch banks in the order in which they are received. If an application is incomplete, the division shall notify the applicant by e-mail. An application will not be considered to have been received until it is in a complete form. An application is complete when all information required by the application form has been submitted and received. The division may request additional information from an applicant even if the application is considered complete.

(2) Factors that will be considered when determining whether to approve an application to establish a new branch bank include, but are not limited to, the following:

(a) the financial history and condition of the applicant;

(b) the capital levels and capital structure of the applicant;

(c) the quality, financial and banking experience and depth of management of the applicant and the proposed branch bank;

(d) the convenience and needs of the community to be served at the proposed location of the new branch bank as evidenced by a brief statement provided by the applicant;

(e) earnings prospects of the applicant after establishing the new branch bank; and

(f) any other factors the division considers that could adversely affect the safety and soundness of the applicant or the viability of the new branch bank.

(3) The department shall issue its order approving or denying the application within 45 days after:

(a) the date of the last publication of the notice of intent to establish a new branch bank; or

(b) the date on which a complete application is received, whichever is later;

(c) the 45-day deadline may be extended by the division when review of the complete application raises questions or concerns that require additional information from the applicant or any other entity or person. Once the additional information is received by the division, the 45-day deadline may be extended by no further than 14 calendar days.

(4) When the department or board approves an application to establish a new branch bank, it will provide written notification to the applicant and the appropriate federal regulatory agency(s). The notification will include any conditions subject to the approval. Summary notification of the decision will be mailed to all persons or entities that have submitted written comment to the application.

(5) When the department denies an application to establish a new branch bank it will provide written notification to the applicant, the appropriate federal regulator(s) and all persons or entities that have submitted written comment to the application. The written notification to the applicant will include the reasons for the denial.

(6) If an administrative hearing is requested under MAPA on the denial of an application, the time for the filing of a request for a hearing must occur within 14 calendar days following the department's decision. 

(1) A bank must open an approved branch within 18 months of the date of branch bank approval. Upon written request by the applicant and a finding of good cause by the department, the 18-month period may be extended by the department for a maximum of an additional six months.

(2) During the formation and establishment of the new branch bank, the applicant must inform the department of significant changes affecting any of the commitments, representations or projections contained in the original application. Significant changes include, but are not limited to, the location of the new branch bank, the services to be offered by the new branch bank, and the staffing or management of the new branch bank. Significant changes may be sufficient to void the department's approval.

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx. 

(2) Except as provided in ARM 2.59.1203, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any sales finance company licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a sales finance company license issued by the department.

(4) All applicants for a sales finance company license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

This rule has been repealed.

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) Upon expiration of a license issued under 31-1-221, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 31-1-221, MCA;

(c) a reinstatement fee of $50; and

(d) proof that the licensee continues to meet standards for licensure under 31-1-222, MCA.

(2) An expired license that is not reinstated by the last day of February under (1) is "terminated-expired" and may not be reinstated. The holder of a "terminated-expired" license may reapply as a new license applicant.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) "Commissioner" means the Commissioner of Banking and Financial Institutions provided for in 32-1-211 , MCA.

(2) "Department" means the Department of Administration established in 2-15-1001 , MCA, and includes the Commissioner of the Division of Banking and Financial Institutions and the Division of Banking and Financial Institutions.

(3) "Fraud or financial dishonesty or civil judgments involving fraudulent or dishonest financial dealings" means embezzlement, money laundering, identity theft, theft, and other financial related crimes and judgments.

(4) "Manager" means a person employed by a deferred deposit lender as the person responsible for operating the business at the location where the person is employed.

(5) "Monthly net income" means gross salary minus taxes and voluntary deductions. This term includes income from public assistance, child support, alimony, unemployment insurance payments, workers' compensation, and other verifiable sources.

This rule has been repealed.

(1) In the event there is a change of ownership in a licensee, the owner(s) shall file with the department an application for a new license. For purposes of this rule, a change in ownership includes circumstances when 25% or more of the ownership is transferred to a new owner.

(1) An examination of a licensee's lending operations conducted by the department to verify compliance with Title 31, chapter 1, part 7, MCA, and these rules, must consist of a comprehensive review of the records, operations, and affairs of the licensee. The review must include inquiry into:

(a) accounting and financial records;

(b) records of the borrowers' files including:

(i) evidence of required disclosures; and

(ii) use of a department-approved loan agreement form; and

(c) assurance of continued capital adequacy and bonding.

(1) In the case of hearings concerning the issuance, suspension, revocation, or other enforcement actions pertaining to a licensee:

(a) hearings and related discovery must be conducted under the Montana Administrative Procedure Act implementing the Attorney General's model rules in effect October 17, 2016.

(2) The division adopts and incorporates by reference the Attorney General's model rules in effect October 17, 2016 found in ARM 1.3.101, 1.3.102, 1.3.202, 1.3.211 through 1.3.224, and 1.3.226 through 1.3.233, along with the accompanying forms. The Attorney General's rules may be found at http://www.mtrules.org.

(a) any instances of theft from the deferred deposit loan business within ten days of discovery of the theft;

(b) any change in managers within ten days of each occurrence; and

(c) all officer questionnaires must be answered within ten days of the end of any examination.

(a) interest rate;

(b) nonsufficient fund fees; and

(c) examples of typical loan amounts including principal, interest, and fees.

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(a) require completion of employee criminal background questionnaire;

(b) verify and document employment and personal references; and

(c) within ten days of start of employment, request a Montana criminal records check from the Montana Department of Justice.

(2) If the background check demonstrates any criminal convictions involving fraud or financial dishonesty or civil judgments involving fraudulent or dishonest financial dealings, the licensee cannot employ such person, or if already employed, must terminate employment.

(3) Verification of compliance with this rule shall occur during annual exams. Licensees are required to keep accurate employment records on each employee to ensure that the department is able to verify compliance.

(4) A criminal records check conducted by another agency or private company may be used by licensees as a substitute for the records check by the Montana Department of Justice as long as the information provided by the substitute records check contains the same information as the check conducted by the Montana Department of Justice.

(2) An electronic deduction for nonsufficient funds shall be separate and apart from an electronic deduction for the amount of the loan, interest, or any fees.

(3) An electronic deduction for nonsufficient funds authorized by the borrower under (1) may not be presented to the borrower's financial institution until the licensee has presented the check for payment.

(2) Verification of income shall be in a form of most recent pay stubs for employment, or other official documents for public assistance, child support, alimony, unemployment insurance, and workers' compensation.

(1) For purposes of 31-1-721(2), MCA, department approval of a deferred deposit loan agreement form submitted for review by a licensee or license applicant means the department has verified that the form contains the provisions required under 31-1-721(2) and 31-1-715(5), MCA, and that it does not contain the provisions prohibited under 31-1-723(20), MCA. Department approval of a loan agreement form does not preclude the department from bringing an administrative action against a licensee for an alleged violation of 31-1-723(7), MCA, based in whole or in part on other terms of the loan agreement form. Department approval of a loan agreement form does not constitute a legal opinion concerning the enforceability of the loan agreement in any legal action between the parties to the agreement.

(1) The NMLS Policy Guidebook dated September 27, 2021, is adopted by reference and available on the NMLS website at mortgage.nationwidelicensingsystem.org/slr/common/policy/Pages/default.aspx. 

(2) Except as provided in ARM 2.59.1516, the NMLS deadlines, policies, procedures, and processes for all licensing-related actions, changes, and reports are adopted and available at mortgage.nationwidelicensingsystem.org/.

(3) Members of the public can look up the current license status, license number, states of licensure, contact information, and regulatory history of any deferred deposit lender licensee at nmls.consumeraccess.org. If an entity is not listed on NMLS consumer access, it does not hold a deferred deposit lender license issued by the department.

(4) All applicants for a deferred deposit lender license shall use the NMLS-approved forms and checklists for all licensing-related activities, including but not limited to initial applications, renewals, amendments, surrenders, and reports.

(1) The renewal period begins November 1. Every renewal applicant shall apply for renewal through the NMLS. Licensees shall use the NMLS renewal process to request renewal of their license.

(2) Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year.

(3) The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) Upon expiration of a license issued under 31-1-705, MCA, due to nonrenewal by the renewal date, the former licensee shall immediately cease from engaging in the activities for which the license was issued. The department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted through the NMLS:

(a) a properly completed license renewal application;

(b) the license renewal fee as set forth in 31-1-706, MCA;

(c) a reinstatement fee of $250; and

(d) proof that the licensee continues to meet standards for licensure under 31-1-707, MCA.

(2) An expired license that is not reinstated by the last day of February under (1) is "terminated-expired" and may not be reinstated. The holder of a "terminated-expired" license may reapply as a new license applicant.

(1) An entity holding a deferred deposit lender license for any period of time during a calendar year reporting period shall complete and file with the department by April 15 of the following calendar year a Deferred Deposit Lender Annual Report of Licensee. The annual report must be filed whether or not any loans were originated during the reporting period and whether or not the licensee renewed its license at the end of the reporting period or held a license when the report came due the following April 15.

(2) A completed annual report may be mailed to the Division of Banking and Financial Institutions, 301 S. Park Ave., Suite 316, P.O. Box 200546, Helena, MT 59620-0546; faxed to (406) 841-2930; or e-mailed to [email protected].

(3) The Deferred Deposit Lender Annual Report of Licensee form, July 13, 2016, edition, is adopted and incorporated by reference.

(4) Copies of the form are available on the division's web site, https://banking.mt.gov/Home/Forms.

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(1) There is no dollar limit on a bank's investment in the following U.S. treasury securities:

(a) bonds;

(b) notes; or

(c) bills.

(2) There is no dollar limit on a bank's investment in U.S. treasury bonds and notes in the form of separate trading of registered interest and principal of securities (STRIPS) .

(3) There is no dollar limit on a bank's investment in the following U.S. government agency ordinary debt issues:

(a) farm credit system (FCS) :

(i) consolidated FCS bonds;

(ii) federal land bank bonds (FLB) ;

(iii) federal intermediate credit bank bonds (FICB) ;

(iv) banks for cooperatives bonds (BC) ; and

(v) federal agricultural mortgage corporation (FAMC) ;

(b) farmers home administration (FmHA) ;

(c) federal housing administration (FHA) ;

(d) federal home loan banks (FHLB) ;

(e) federal home loan mortgage corporation (FHLMC) ;

(f) federal national mortgage association (FNMA) ;

(g) student loan marketing association (SLMA) ; and

(h) United States postal service (USPS) .

(4) There is no dollar limit on a bank's investment in the following U.S. government agency mortgage-backed securities (MBS) , collateralized mortgage obligations (CMOs) and real estate mortgage investment conduits (REMICs) :

(a) instruments issued by the federal home loan mortgage association (FHLMC) ;

(b) instruments issued by the federal national mortgage association (FNMA) ;

(c) instruments issued by the government national mortgage association (GNMA) ;

(d) instruments issued by the federal agricultural mortgage corporation (FAMC) ;

(e) FHLMC MBS pass through securities (PCs) ;

(f) GNMA I, single issuer pass through PCs; and

(g) GNMA II, single and multiple issuer pass through PCs.

(1) Certain other securities are approved for bank investment. There is no dollar limit on a bank's investment in:

(a) general services administration (participation certificates) ;

(b) maritime administration (bonds and notes) ; and

(c) Washington metropolitan area transit authority (bonds) .

(2) A bank's investment is limited to 50% of capital and surplus in:

(a) Asian development bank (bonds and notes) ;

(b) financing corporation (FICO) (bonds) ;

(c) Inter-American development bank (bonds) ;

(d) resolution funding corporation (REFCORP) (bonds) ;

(e) Tennessee valley authority (TVA) (bonds) ; and

(f) world bank (bonds and notes) .

(1) Banks may invest, without dollar limitation, in the general obligation of any state which is part of the United States of America.

(a) Such obligations must be fully guaranteed as to the repayment of principal and interest. Evidence of such a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the state responsible for repayment of the general obligation.

(2) Banks may invest, without dollar limitation, in the general obligations of any Montana political subdivision.

(a) Such obligations must be issued pursuant to the Constitution or statutes of the state of Montana or the charter or ordinances of the respective county or city within the state of Montana.

(b) Such obligations must be fully guaranteed as to the repayment of principal and interest. Evidence of such a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the Montana political subdivision responsible for repayment of the general obligation.

(c) The issuing body must not have been in default with respect to the payment of principal or interest on any of its obligations within five years preceding the date of the investment.

(3) Banks may invest up to 40% of their capital and surplus, per issuer, in the general obligations of any out-of-state political subdivision.

(a) Such obligations must be fully guaranteed as to the repayment of principal and interest. Evidence of such a full guarantee includes, but is not limited to, the pledge of the full faith and credit of the out-of-state political subdivision responsible for repayment of the general obligation.

(b) The default requirements of (2)(c) must be met, and the obligations must have been rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy.

(c) Banks that have branch banks in other states, as that term is defined in 32-1-109, MCA, may also invest without limitation in general obligations of the political subdivisions of the states in which the offices are located.

(4) Banks may invest, without limitation, in revenue bonds issued by the state of Montana or its political subdivisions.

(a) Banks that have branch banks in other states may also invest without limitation in revenue bonds issued by those states or their political subdivisions.

(5) Banks may invest up to 40% of their capital and surplus, per issuer, in revenue bonds issued by any other state or its political subdivisions whereby the obligations are payable from pledged fee or tax revenue from designated sources.

(a) The default requirements of (2)(c) must be met, and the obligations must have been rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy.

(6) Banks may invest up to 20% of their capital and surplus, per issuer, in industrial development revenue obligations issued by a political subdivision of the state of Montana, when repayment is dependent upon a nongovernmental obligor and when such issues are in general accord with the commercial lending policy of the bank.

�

(1) Banks may invest up to 20% of their capital and surplus, per issuer, in corporate bonds.

(2) These bonds must be investment grade, i.e., rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy. Corporate bonds should be reviewed as necessary to assure the bank's board of directors that bond quality has not fallen below investment grade.

(2) Shareholders must have a proportionate undivided interest in any mutual fund utilized under this rule.

(3) Shareholders must be shielded from personal liability for acts or obligations of the mutual fund.

(4) The bank's investment policy, as formally approved by its board of directors, must specifically provide for such investments.   Prior approval of the board of directors must be obtained for initial investments in specific mutual funds and recorded in the official board minutes.   Procedures, standards and controls for managing such investments must be implemented prior to the investment being made.

(1) Certain other instruments which may have investment characteristics are approved for state-chartered banks. They are the following:

(a) banks may invest up to 100% of their capital and surplus, per accepting bank, in bankers acceptances;

(b) banks may invest, on a per issuer basis, in certificates of deposit (CDs) or deposit notes from insured financial institutions up to the greater of 20% of their unimpaired capital and surplus or the maximum amount of federal deposit insurance available for deposits. This limitation applies to the deposit and any accrued interest;

(c) banks may invest up to 20% of their capital and surplus, per issuer, in commercial paper provided the commercial paper is rated A1 or P1, at the time of purchase, by a recognized national investment rating organization. Equivalent ratings from other established and generally recognized national rating organizations may be substituted;

(d) banks may invest up to 20% of their capital and surplus, per issue, in privately issued CMOs and REMICs;

(e) privately issued CMOs and REMICs will not represent more than 40% of a bank's investment portfolio, or more than 400% of a bank's unimpaired capital and surplus, whichever is the lesser; and

(f) banks may invest up to 20% of their capital and surplus, per issuer, in trust preferred securities. These bonds must be investment grade, i.e., rated in one of the four highest grades by a recognized national investment rating organization. Other rating services may be used if the gradations are equivalent to those above, and the rating services are identified by the bank's investment policy.

For purposes of the Montana Mortgage Act and this subchapter, the following definitions apply:

(1) "Breach of trust" means:

(a) a wrongful act, use, misappropriation, or omission with respect to any property or fund that has been committed to a person in a fiduciary or official capacity; or

(b) the misuse of a person's official or fiduciary position to engage in a wrongful act, use, misappropriation, or omission.

(2) "Dishonesty" means:

(a) to cheat or defraud directly or indirectly;

(b) to cheat or defraud for monetary gain or its equivalent; or

(c) to wrongfully take property belonging to another in violation of any criminal statute.

(d) Dishonesty includes acts involving want of integrity, lack of probity, or a disposition to distort, cheat, or act deceitfully or fraudulently, and may include crimes which federal, state, or local laws define as dishonest.

(3) "Employing" means the entity for whom the individual works is liable for withholding payroll taxes pursuant to Title 26 of the United States Code.

(4) "Extant" means currently or actually existing; still existing; not destroyed or lost.

(5) "Initiation of an investigation" means any administrative, civil, or criminal proceeding initiated by a state, municipal or federal governmental entity, the Federal Home Loan Mortgage Corporation or the Federal National Mortgage Agency and such proceeding is evidenced by a written formal complaint or charge filed by the investigating agency.

(6) "Material change" means:

(a) a change in the board of directors or the principal officers;

(b) the acquisition or disposition of another company; or

(c) any change which would have authorized the department not to issue a license, if it had occurred before licensure.

(7) "Personal information" means: an individual's name, signature, address, or telephone number, in combination with one or more additional pieces of information about the individual, consisting of the individual's passport number, driver's license, or state identification number, insurance policy number, bank account number, credit card number, debit card number, password, or personal identification number required to obtain access to the individual's finances. A social security number, in and of itself, constitutes personal information.

(8) "Restitution" may include, but is not limited to, refunds of any or all the fees paid directly or indirectly by the borrower.

(9) "Safeguard" means to prevent unauthorized access, use, disclosure, or dissemination.

(10) "Termination" means separation from employment for any reason. The term includes the circumstance of a loan originator when the employing entity's Montana license is suspended, revoked, or surrendered even though the loan originator may continue to be employed by the entity in another capacity or in another state.

(11) "Work in a related field" or "in a related field" means three years of experience as a:

(a) mortgage broker or a branch office manager of a mortgage broker business;

(b) mortgage banker, responsible individual, or branch manager of a mortgage banking business;

(c) mortgage loan officer;

(d) branch manager of a mortgage broker or lender;

(e) mortgage loan originator; or

(f) state or federal regulator who examines compliance of residential mortgages of state or federally chartered financial institutions.

(1) Satisfactory proof of experience for a designated manager demonstrates three years of experience by providing:

(a) copies of W-2 or 1099 tax forms verifying employment; or

(b) verification of active licensure as a mortgage loan originator in another state through the Nationwide Mortgage Licensing System (NMLS).

(1) Transfer of an individual mortgage loan originator license from one entity to another must be approved by the department. To transfer an individual mortgage loan originator license, the individual mortgage loan originator shall request sponsorship through the Nationwide Mortgage Licensing System (NMLS) by the new entity. The new entity must accept sponsorship of the individual through the NMLS. The request for sponsorship must be accompanied by a nonrefundable processing fee of $50.

This rule has been repealed.

This rule has been repealed.

(1) The surety bond must be issued by a surety company authorized to do business in the state of Montana. The bond, including any and all riders and endorsements executed subsequent to the effective date of the bond, must be placed on file with the NMLS. The entity name on the application and on the surety bond must match exactly. The bond must be continuous. Whether or not the bond is renewed, continued, reinstated, reissued, or otherwise extended, replaced, or modified, including increases or decreases in the penal sum, it is deemed one continuous obligation, and the surety upon the bond is not liable in an aggregate or cumulative amount exceeding the penal sum set forth on the face of the bond.

(2) Remedies relating to the bond are cumulative and nonexclusive and do not affect any other remedy available at law.

(1) The department may suspend or revoke a license for a violation of the Montana Mortgage Act, this subchapter, or for any other violation of state or federal law pertaining to licensees or residential mortgage loans.

(2) A licensee may offer to surrender a license by submitting an offer of surrender or withdrawal of a license through the NMLS. An offer of surrender or accepted surrender does not affect the licensee's civil or criminal liability for acts initiated or committed while licensed.

(3) A licensee who surrenders a license while not in compliance with a conditional agreement cannot reinstate the license or obtain a new license for a period of three years after the surrender, unless the conditions that led to the conditional license have been fully resolved.

(4) A revocation, suspension, or surrender of a license does not impair or affect the obligation of a preexisting lawful contract between the licensee and any person, including a borrower.

(5) In the event of a revoked, suspended, or surrendered mortgage broker, mortgage lender, or loan originator license, no fees will be refunded by the department.

This rule has been repealed.

(1) A complaint form must be submitted in writing to the department. If the basis of the complaint relates to the Montana Mortgage Act, it will be investigated by the department.

(2) The Complaint Form dated January 23, 2020, is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

(1) A mortgage broker shall create and retain a residential mortgage file. The residential mortgage file shall contain:

(a) a record of all cash, checks, or other monetary instruments received in connection with each mortgage loan application showing the identity of the payor, date received, amount, and purpose;

(b) applicant's name, date, name of person taking the application, HUD-1 Settlement Statement, copies of all agreements or contracts with the applicant, including any commitment and lock-in agreements, and all disclosures required by state and federal law signed and dated by the borrower, and where applicable, signed and dated by the individual mortgage broker or loan originator;

(c) copies of the loan estimate and closing disclosures required by the Truth in Lending Act � Real Estate Settlement Practices Act (TILA-RESPA) Integrated Disclosure (TRID) rule, which must be signed and dated by the borrowers;

(d) a record of any and all contact between the mortgage broker or loan originator and the borrower relating to the rate, terms, or conditions of the loan;

(e) a copy of the evidence of insurance or insurance binder as required by the lender;

(f) a copy of the statement from the investor authorizing the loan;

(g) a copy of the appraisal;

(h) a copy of the borrower's credit report;

(i) a copy of all documentation used to support the borrower's income as required by the lender;

(j) a copy of all documentation used to support the borrower's assets as required by the lender;

(k) a copy of the promissory note;

(l) a copy of the policy of title insurance commitment on the property securing the loan;

(m) a copy of the first three pages of the deed of trust and final Truth in Lending disclosure signed by the borrower; and

(n) copies of all uniform residential loan applications.

(2) A mortgage broker shall maintain a spreadsheet of all residential mortgage applications taken, including all applications that are pending, closed, withdrawn, denied, or cancelled. The spreadsheet shall contain, at a minimum:

(a) the first and last name of the borrower(s);

(b) the property address (street, city, state, and zip code);

(c) the phone number of the borrower(s);

(d) the initial application date;

(e) the date the credit report was requested for the borrower(s);

(f) the loan amount;

(g) the status of the loan (pending, closed, withdrawn, cancelled, denied);

(h) the total fees received indirectly or directly by the mortgage broker at the closing of the loan;

(i) the total adjusted origination charges received by the mortgage broker at the closing of the loan;

(j) the name of the individual mortgage loan originator who originated the loan; and

(k) the names of all individuals who received compensation for originating or assisting in the origination of the loan.�

(1) A mortgage broker shall create and retain a residential mortgage file. The residential mortgage file shall contain:

(a) a record of all cash, checks, or other monetary instruments received in connection with each mortgage loan application showing the identity of the payor, date received, amount, and purpose;

(b) applicant's name, date, name of person taking the application, HUD-1 Settlement Statement, copies of all agreements or contracts with the applicant, including any commitment and lock-in agreements, and all disclosures required by state and federal law signed and dated by the borrower, and where applicable, signed and dated by the individual mortgage broker or loan originator;

(c) copies of the loan estimate and closing disclosures required by the Truth in Lending Act � Real Estate Settlement Practices Act (TILA-RESPA) Integrated Disclosure (TRID) rule, which must be signed and dated by the borrowers;

(d) a record of any and all contact between the mortgage broker or loan originator and the borrower relating to the rate, terms, or conditions of the loan;

(e) a copy of the evidence of insurance or insurance binder as required by the lender;

(f) a copy of the statement from the investor authorizing the loan;

(g) a copy of the appraisal;

(h) a copy of the borrower's credit report;

(i) a copy of all documentation used to support the borrower's income as required by the lender;

(j) a copy of all documentation used to support the borrower's assets as required by the lender;

(k) a copy of the promissory note;

(l) a copy of the policy of title insurance commitment on the property securing the loan;

(m) a copy of the first three pages of the deed of trust and final Truth in Lending disclosure signed by the borrower; and

(n) copies of all uniform residential loan applications.

(2) A mortgage broker shall maintain a spreadsheet of all residential mortgage applications taken, including all applications that are pending, closed, withdrawn, denied, or cancelled. The spreadsheet shall contain, at a minimum:

(a) the first and last name of the borrower(s);

(b) the property address (street, city, state, and zip code);

(c) the phone number of the borrower(s);

(d) the initial application date;

(e) the date the credit report was requested for the borrower(s);

(f) the loan amount;

(g) the status of the loan (pending, closed, withdrawn, cancelled, denied);

(h) the total fees received indirectly or directly by the mortgage broker at the closing of the loan;

(i) the total adjusted origination charges received by the mortgage broker at the closing of the loan;

(j) the name of the individual mortgage loan originator who originated the loan; and

(k) the names of all individuals who received compensation for originating or assisting in the origination of the loan.�

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) In addition to all other enforcement actions allowed by Montana law, the department may suspend or revoke a license pursuant to Title 2, chapter 4, part 6, MCA, of an entity that does not correct the deficiencies found by the department after an examination and within the time granted by the department.

This rule has been repealed.

(1) Costs in bringing the administrative action as used in 32-9-133, MCA, include:

(a) administrative law judge charges;

(b) court reporter fees;

(c) transcription cost as provided under 2-4-614, MCA;

(d) exhibit preparation cost if the exhibit was admitted into evidence at the hearing;

(e) deposition cost if the deposition was used at the hearing;

(f) fees, if any, for service of subpoenas;

(g) witness fees and mileage for the department's lay/fact witnesses; and

(h) mileage for the department's expert witness if the expert appears personally and testifies at the hearing.

(2) Nothing in this rule limits the department's authority under 32-9-130, MCA, to charge for a special examination performed before a department decision to initiate a contested case under the Montana Administrative Procedure Act and upon which the decision is based in whole or in part. The manner of calculating the charge for a special examination is the same as for a regularly scheduled compliance examination under 32-9-130(7), MCA.

(1) For purposes of 32-9-124, MCA, a scheme to defraud or mislead a borrower, a lender, or any other person shall include but is not limited to:

(a) misstating a borrower's income, assets, obligations, employment status, credit history, or financial resources, or the borrower's equity in the dwelling which secures repayment of the loan to a lender;

(b) stating to a lender, or more than one lender, that a borrower intends to use more than one property as a primary residence;

(c) charging or accepting any fees in excess of fees that have been or will be remitted to third parties; and

(d) failing to disburse funds in accordance with any commitment or agreement with the borrower.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) All licensees shall maintain and preserve financial records concerning business operations, transactions with customers, and escrow account transactions.

(2) Any books, accounts, or records required to be maintained by the department may be maintained in paper, electronic, or digital format approved by the department provided the records shall be made available to the department as required by the statutes and rules, and at the request of the department, the records shall be printed or transferred to a format that is usable by the department.

(3) A mortgage lender shall create and maintain the following records:

(a) copies of all disclosures required by 32-9-148, MCA;

(b) copies of all payroll records, including federal and state withholding tax forms, W-2s, and 1099 forms filed with the Internal Revenue Service by the licensee or its agent on behalf of individuals employed by the licensee or on behalf of individuals acting as independent contractors in the mortgage lending business;

(c) a general ledger and subsidiary records sufficient to produce, when requested by the department, an accurate monthly statement of assets and liabilities, and a cumulative profit and loss statement for the current operating year;

(d) all checkbooks, bank statements, deposit slips, and cancelled checks that pertain to the mortgage lending business of the licensee;

(e) supporting documentation for all expenses and fees paid by the mortgage lender on behalf of the customer; and

(f) copies of all credit report bills received from all credit reporting agencies for the most recent five-year period.

(4) Mortgage lenders shall maintain an employee file for each employee that contains all documents related to the hiring of the employee, including name, date of birth, position or title and responsibilities, starting date, and date and reason for termination of employees. For purposes of this rule, employee shall include employees, independent contractors, and consultants who are involved in loan origination, loan servicing, loan negotiations, investor solicitation, or who transact business with borrowers or lenders.

(5) Financial records must include, at a minimum:

(a) a record of all monies received from borrowers, such as a cash receipts journal, showing at least:

(i) name of payor;

(ii) date of receipt;

(iii) amount received;

(iv) purpose of receipt including identification of the loan to which it relates, if any; and

(v) disposition of all monies received including the date and place of deposit or, if not deposited, the date, name of the person who received the monies, and the manner in which the monies were transmitted;

(b) a sequential listing of all checks written for each bank account relating to the licensee's business, such as a cash disbursement journal, showing at least:

(i) name of the payee;

(ii) date of payment;

(iii) amount of the payment; and

(iv) purpose of the payment including identification of the loan to which it relates, if any;

(c) bank account activity source documents for every account maintained for the licensee's business including at least:

(i) receipted deposit tickets and if "less cash deposits" are made, an explanation of the use of the cash;

(ii) paid checks if available and if these items are truncated, a copy of a document authorizing the department to request and receive copies of processed items from the financial institution;

(iii) bank advices, including, but not limited to, debit and credit notices and overdraft notices; and

(iv) monthly or periodic statements;

(d) detail on wire transfers into or out of the account(s) including:

(i) the name of the person who is the payor or payee;

(ii) date;

(iii) amount;

(iv) purpose of receipt or payment; and

(v) identification of the loan to which it relates, if any; and

(e) a record or file of all monies owed by the licensee, such as an accounts payable journal.

(6) Mortgage lenders shall maintain all borrower and investor complaints except complaints unrelated to borrower or investor transactions. Complaint files shall include:

(a) copies or originals of all written complaints by borrowers and investors maintained in a separate complaint file by the individual's name in alphabetical order;

(b) a copy of the response;

(c) copies of correspondence related to the complaints; and

(d) a written disposition of the complaint.

(7) Mortgage lenders shall maintain residential borrower files that must include:

(a) a copy of each loan application form;

(b) a copy of each executed fee agreement, if prepared;

(c) in the case of residential or single family loans, a borrower acknowledged statement that a loan interest rate will float;

(d) a copy of the executed lock agreement, if used. The lock agreement must specify at a minimum:

(i) the date of the agreement;

(ii) the file identification and property address;

(iii) the lock-in rate;

(iv) the lock expiration date;

(v) a disclosure that the lock may be subject to change if any of the loan factors change;

(vi) the loan type (fixed, adjustable rate mortgage, other); and

(vii) a disclosure that if the lock expires, the rate and points are subject to change;

(e) the term of the loan;

(f) the loan fee and discount, if any;

(g) copies of all good faith estimates prepared pursuant to Regulation X (24 CFR 3500);

(h) a copy of the executed authorization to release credit information form;

(i) a copy of final credit report, or the report relied upon for the loan decision, if other than the final credit report, received on the borrower including documentation of borrower payment history;

(j) all documents relating to the credit, underwriting, and pricing decisions of each loan file irrespective of whether the application has been denied, approved, or withdrawn;

(k) all notes and comments by anyone working on the loan file;

(l) a copy of the truth in lending disclosure statements made pursuant to Regulation Z (12 CFR 226);

(m) a copy of the final U.S. Housing and Urban Development (HUD) settlement statement;

(n) a copy of all denial letters;

(o) a copy of all appraisals;

(p) a copy of all disclosures, handbooks, and pamphlets required by federal law; and

(q) copies of the loan estimate and closing disclosures required by the TILA-RESPA Integrated Disclosure rule, which must be signed and dated by the borrowers (12 CFR 1024 and 1026).

(8) Advertising records must be maintained for five years following the last date of publication of the advertisement. All licensees shall maintain copies of:

(a) all printed advertising published in newspapers, magazines, newsletters, or other media designed for mass distribution; and

(b) scripts, or audio- and videotapes, for advertising broadcast on radio or television.

(9) Escrow account records must be maintained as follows:

(a) a licensee shall deposit all trust funds received from a client into the escrow depository and shall keep such funds in the escrow depository until the written escrow instructions agreed to by all parties have been fulfilled;

(b) a licensee shall not comingle any monies received from a client for deposit into an escrow account with personal funds of the licensee. For purposes of this rule, the following shall not constitute commingling of trust funds with personal funds provided the funds are removed from the trust account within 30 days:

(i) earned, but untransferred, interest income accruing to the licensee pursuant to a written agreement with the client; or

(ii) earned, but untransferred, fees due the licensee;

(c) every deposit into a neutral escrow depository shall be accompanied by a letter of transmittal that shall include a written notation of the file identification assigned to the transaction on whose behalf the deposit is made. Compliance with this rule may be satisfied when a licensee has attached a copy of the client's check to the letter of transmittal.

(10) With respect to mortgage loans for which a commitment has been issued but the loan has not yet closed and funded, each mortgage lender shall maintain a pipeline report or reports, updated on a monthly basis, that provides the following information, both by state and in the aggregate:

(a) total number and dollar amount of such loans;

(b) type of loan (i.e., purchase money, refinance, etc.);

(c) total number and dollar amount of all such loans having a locked-in interest rate and total number and dollar amount of such loans whose interest rate is not locked in;

(d) the date the commitment was issued; and

(e) any fees collected from the borrower up to the date of commitment by any party to the mortgage transaction.

(11) For each line of credit to the lender, a mortgage lender shall maintain a report, or equivalent documentation, updated monthly, listing:

(a) each advancement of funds from the line of credit that reflects the date of the advancement;

(b) the name of the borrower;

(c) the date that the mortgage loan closed; and

(d) the date the funds were forwarded to satisfy its obligation for the advancement from the line of credit.

(12) Each mortgage lender shall maintain a list, by state, of the closing agents or attorneys that it uses that contains, at a minimum, the name, address, and telephone number of the closing agent or attorney.

(13) Mortgage lenders shall maintain a mortgage loan application log showing:

(a) the first and last name of the borrower(s);

(b) the property address (street, city, state, and zip code);

(c) the phone number of the borrower(s);

(d) the initial application date;

(e) the date the credit report was requested for the borrower(s);

(f) the loan amount;

(g) the status of the loan (pending, closed, withdrawn, cancelled, denied);

(h) the total fees received indirectly or directly by the mortgage lender at the closing of the loan;

(i) the total fees paid to the mortgage loan originator;

(j) the loan funding source;

(k) the service release premium; and

(l) the name of the individual mortgage loan originator who originated the loan.

(14) For borrower loans that are funded directly or indirectly by investors who are individuals, the following must be maintained by the lender:

(a) a copy of the written evidence of obligation and the instrument creating the investor's lien or assignment of the lien;

(b) a copy of documents evidencing that the instrument creating the lien or assignment has been recorded; and

(c) copies of guarantees, surety agreements, any recourse agreements or guarantees, and correspondence related to any statements made to the investor or any investment made by the investor. 

This rule has been repealed.

(1) For purposes of accuracy or completeness, a person about whom the department has generated a record in the NMLS may make a written request to the department that it correct or amend the record. The written request must not exceed one side of an 8x11 sheet of paper in length and must concisely set out the basis for the person's contention that the record is either inaccurate or incomplete. At the time of making the written request for correction or amendment, the person shall provide a copy of any documentation that the person wishes the department to consider supporting the contention that the department's record is inaccurate or incomplete.

(2) As promptly as required by the circumstances after receiving a request as provided in (1), the department shall:

(a) make the requested correction or amendment; or

(b) inform the person in writing of the department's refusal to correct or amend the record and the reason for the refusal.

(3) A copy of the person's concise written statement as provided for in (1), the department's written refusal to correct or amend the record, and the reason for the refusal must be made available to any person requesting it from the department.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) In addition to the trade associations specifically named in 32-9-160(3), MCA, the department may enter into agreements or sharing arrangements allowing the sharing of information and material with the following governmental agencies and associations representing governmental agencies:

(a) State Regulatory Registry, LLC;

(b) Multi-State Mortgage Committee;

(c) Federal Housing Administration;

(d) Consumer Financial Protection Bureau;

(e) United States Department of Housing and Urban Development;

(f) Federal Trade Commission; and

(g) Financial Crimes Enforcement Network (FinCEN).

(1) Upon expiration of a license under 32-9-134, MCA, due to nonrenewal by the renewal date, the licensee shall immediately cease from engaging in the activities for which the license was issued. Except as provided in (3), the department may reinstate an expired license, provided that by the last day of February following expiration of the license, the following are submitted:

(a) a properly completed license renewal application through NMLS;

(b) the renewal fee;

(c) the NMLS fee;

(d) a late renewal fee of $250;

(e) proof that the licensee continues to meet standards for licensure under 32-9-120, MCA; and

(f) proof of continuing education compliance.

(2) An expired license that is not reinstated by the last day of February in accordance with (1) is "Terminated-Expired" and may not be reinstated except as provided in (3). The holder of a "Terminated-Expired" license may reapply as a new license applicant.

(3) If a "Terminated-Expired" status of the license of a military member or reservist was the result of the licensee being on active duty status at the time of renewal, the license may be reinstated, if within 30 days of the licensee's discharge from active duty status, the department receives through NMLS an acceptable sponsorship request from the licensee's employing mortgage broker or mortgage lender and it receives outside of the NMLS renewal process within that 30-day period, the following:

(a) a properly completed Mortgage Loan Originator License Renewal or Reinstatement Form available on the department's website at banking.mt.gov;

(b) a full year renewal fee;

(c) proof of completion of eight hours of approved continuing education;

(d) copies of the federal government orders by which the licensee was placed on active duty status and discharged from active duty status; and

(e) proof that the licensee continues to meet standards for licensure under 32-9-120, MCA.

(4) Upon suspension of a license under 32-9-126, MCA, the licensee shall immediately cease from engaging in the activities for which the license was issued. The department may lift the suspension and reinstate the license upon its determination that the suspended licensee has complied with the terms and conditions of the final order by which the license was suspended and there is no fact or condition then existing that disqualifies the suspended licensee from being licensed. The department on its own or at the suspended licensee's request may initiate a review of a suspended licensee's compliance with the terms and conditions of the order suspending the license.

This rule has been repealed.

(2) Ineligibility for licensure is triggered by the conviction and not by an extant record of the conviction.

(1) An entity applying for a license as a mortgage broker or mortgage lender for the first time in Montana shall submit with its application the total combined annual loan production volume for the year preceding the year of application as required by 32-9-123(2)(b), MCA.

(2) An entity having no prior business history, or a business history of less than one year at the time of application, shall purchase a surety bond in the amount of $25,000.

This rule has been repealed.

(1) Licensees shall use a form that is substantially similar to the Mortgage Loan Origination Disclosure form dated September 23, 2011, which is available on the department's website at banking.mt.gov. Licensees may customize the form to meet their individual needs.

(2) The disclosure must include the address, phone number, facsimile number, e-mail address, and website of the department.

(3) The disclosure must include the unique identifier issued by the NMLS for the employing entity and mortgage loan originator.

(4) The disclosure must be signed by the borrower and co-borrower, if any, and the mortgage loan originator.

(1) Licenses issued under Title 32, chapter 9, part 1, MCA, expire December 31. Licensees shall submit their renewal applications by December 1 of each year to ensure issuance of the license to qualified renewal applicants by January 1 of the following year. The renewal fees for the license period after January 1 2022, are:

(a) Mortgage Broker Entity, $125.00;

(b) Mortgage Broker Branch, $62.50;

(c) Mortgage Lender Entity, $750.00;

(d) Mortgage Lender Branch, $62.50;

(e) Mortgage Loan Originator, $100.00;

(f) Mortgage Servicer Entity, $750.00;

(g) Mortgage Servicer Branch, $62.50.

(1) Section 32-9-120(1)(c) and 32-9-113, MCA, require mortgage loan originators, as well as ultimate equity owners and control persons of entities, to meet financial responsibility standards. These persons are referenced in ARM 2.59.1739 through 2.59.1742 as "individuals."

(2) Financial responsibility, character, and general fitness are continuing requirements for individuals and must be met at all times including upon initial licensure and renewal.

(1) The department shall find an individual lacks the required financial responsibility if a pattern of disregard is shown regarding the management of the individual's personal financial affairs.

(2) In determining whether an individual has shown a pattern of disregard regarding their own personal financial affairs, the department shall consider the following factors:

(a) the existence of outstanding judgment(s), excluding judgments resulting solely from medical expenses;

(b) the existence of outstanding tax liens or other government liens or filings;

(c) a pattern of delinquency in child support or student loan payments;

(d) the existence of outstanding collection actions against the individual unless solely as a result of medical expenses;

(e) the existence of outstanding charged-off accounts with a remaining past due balance owed unless solely as a result of medical expenses;

(f) the existence of three or more accounts currently 90 days or more past due; and

(g) a foreclosure within the past three years.

(3) The department may not consider a bankruptcy as the sole basis for a finding that an individual lacks the required financial responsibility; however, the department may consider the factors that lead to the bankruptcy.

(1) If an individual's credit report or response to any application disclosure question contains adverse information, the department shall:

(a) notify the individual in writing of the specific items that must be addressed; and

(b) specify the documentation that must be provided for the department's consideration and review.

(2) Examples of the type of documentation that the department may request include, but are not limited to, the following:

(a) a written explanation of the circumstances surrounding the adverse information reported; and

(b) documents that the department finds necessary for its review of the adverse information including, but not limited to, copies of:

(i) satisfactions of judgment;

(ii) bankruptcy discharge orders, schedules, or dismissal documents;

(iii) satisfactions of outstanding tax liens or other governmental liens;

(iv) court documents showing the factual basis underlying the adverse information being reviewed by the department and how the matter was resolved or adjudicated; and

(v) account statements or letters from the individual's creditors, or lien or judgment holders, explaining and verifying the current status of any past due accounts, including documentation of any repayment plans and agreements, as well as any temporary or permanent modifications to such accounts.

(3) Any document provided must be legible and complete. Incomplete documents may not be accepted.

(4) If the individual is unable to obtain the documents the department requests, the individual shall support that fact with documentation from the source of the unavailable documents consisting of a written statement from the agency or creditor who holds or held the records. The statement must be:

(a) written on the agency's or creditor's letterhead indicating that:

(i) the agency or creditor does not have any record of the matter;

(ii) the record was lost, damaged, or destroyed, or cannot otherwise be produced; and

(iii) the reason why the information is not available;

(b) signed by the agency's or creditor's records custodian; and

(c) include contact information such as phone number, mailing address, or e-mail address.

(1) In making a determination whether an applicant has demonstrated financial responsibility, character, and general fitness, the department shall consider the following:

(a) the individual's credit history reflected in a credit report;

(b) supplemental information and documentation requested from and provided by the individual as determined necessary by the department;

(c) responses and information contained in the individual's application filings;

(d) previous and current license history with the department, to include any regulatory actions that have occurred;

(e) other information that reflects upon the financial responsibility, character, and general fitness, whether favorably or adversely;

(f) the timing and context of the information reviewed;

(g) patterns of conduct; and

(h) factors indicating that financially adverse information may be the result of the involuntary loss of job or income, divorce, or health issues. Under such circumstances, the individual shall provide documents showing attempted workout arrangements with creditors or other factors indicating the individual has made an attempt to correct his or her financial difficulties.

(2) The department may not base a license application denial solely on a license applicant's credit score.

(3) In determining financial responsibility, the department shall consider the totality of the applicant's credit history, and surrounding circumstances, in exercising its discretion under 32-9-120(1)(c), MCA.

(4) Although the following is not an exclusive list, the department may consider the following factors, or a combination thereof, in determining whether to deny, condition, suspend, or revoke a license. The individual:

(a) has failed to fully provide any documentation required by the department;

(b) has made a false attestation associated with a filing related to an application for a license or a license renewal;

(c) has failed to pay in full any past due account, lien, judgment, or charged-off balance either as of the date of the issuance of a credit report to the department, or at time of initial licensure, designation as a control person or ultimate equity owner, or at renewal of any license. In reviewing this factor, the department shall make an exception for any account, lien, judgment, or charged-off balance that is solely due to medical expenses;

(d) is in arrears or has failed to comply with the terms of a repayment plan or

agreement entered into with a creditor;

(e) has failed to make timely payments under a plan or agreement with any state or federal tax or other regulatory agency; and

(f) has any of the factors listed in ARM 2.59.1740(2).

(1) A mortgage servicer licensee shall compile and submit a report to the department 45 days after the end of each quarter. The quarter end dates are March 31, June 30, September 30, and December 31.

(2) At the servicer's election, each servicer shall submit either the expanded mortgage call report through the NMLS or the Quarterly Statement for Mortgage Servicing Activity dated May 31, 2016, for every quarter during which it held a license.

(3) The Quarterly Statement for Mortgage Servicing Activity dated May 31, 2016, which is adopted and incorporated by reference, is available on the division's web site at https://banking.mt.gov/Home/Forms.

(4) The deadline for submitting the reports listed in (1) is extended by 30 days to allow reports to be submitted within a total of 75 days after the end of each quarter for the quarters ending June 30, 2020, September 30, 2020, December 31, 2020, and March 31, 2021. This section sunsets on June 1, 2021.

�

(1)� A mortgage servicer shall create and retain a file for each Montana residential mortgage loan which it services.� The file must contain, if applicable:

(a)� the borrower (or borrowers) name(s);

(b)� a copy of the original note and deed of trust or mortgage;

(c)� a copy of any disclosures or notifications provided to the borrower required by state or federal law or rule or regulation;

(d)� a copy of all written requests for information received from the borrower and the mortgage servicer's response to such requests as required by state or federal law;

(e)� a record of all payments received from the borrower containing all information required to be provided to a borrower upon request under 32-9-169(1), MCA;

(f)� a copy of any bankruptcy plan approved in a proceeding filed by the borrower or a co-owner of the property subject to the mortgage;

(g)� a communications log documenting all verbal communication with the borrower or the borrower's representative;

(h)� a record of all efforts by the mortgage servicer to comply with the duties required under 32-9-170(7), MCA, including all information utilized in the mortgage servicer's determination regarding loss-mitigation proposals offered to the borrower;

(i)� a copy of all notices sent to the borrower related to any foreclosure proceeding filed against the encumbered property;

(j)� records regarding the final disposition of the loan including a copy of any collateral-release document, records of servicing transfers, charge-off information, or real estate owned (REO) disposition; and

(k)� copies of all contracts, agreements, and escrow instructions to or with any depository institution, any mortgage lender, mortgage servicer, or mortgage broker, any warehouse lender or other funding facility, any servicer of mortgage loans, and any investor, for a period of not less than five years after expiration of any such contract or agreement.�

(1)  Applications for renewal of licenses may be submitted to the department through the NMLS during the annual renewal period from November 1 to December 31.

(2)  The department shall process all completed renewal applications submitted to it in the order received.

(3)  The holder of an expired license may not conduct any business in Montana until becoming properly licensed.

(1)� Records may be maintained electronically if the storage system complies with the Fair and Accurate Credit Transactions Act of 2003 (15 USC 1681 et seq.), the Gramm-Leach-Bliley Act (15 USC 6801 et seq.), and the regulations adopted thereunder (16 CFR 314).

(2)� A licensed entity shall make all records available to the department in a usable format pursuant to 32-9-121 and 32-9-130, MCA.

(3)� An individual who terminates sponsorship with an entity shall relinquish to the entity any records in the individual's possession at the time of termination.

(4)� A person who disposes of records at the end of the retention period shall destroy personal information by shredding, burning, erasing, or otherwise making the information indecipherable as required by 30-14-1703, MCA, the Fair and Accurate Credit Transactions Act of 2003 (15 USC 1681 et seq.), and the regulations adopted thereunder (16 CFR 682).

(5)� A licensed entity that becomes aware of an instance of unauthorized access to customer information shall comply with 30-14-1704, MCA.�

(1)  If a licensed entity is actively engaged in the business of residential mortgage loans, the entity's designated manager is responsible for proper retention, maintenance, safeguarding, and disposal of records for the whole entity.  The designated manager of each branch is responsible for proper retention, maintenance, safeguarding, and disposal of records for the branch managed.

(2)  If a licensed entity ceases doing business in Montana, the entity's designated manager, as of the entity's last day of operation as designated on the NMLS Company Form, is responsible for proper retention, maintenance, safeguarding, and disposal of records as set forth in ARM 2.59.1746.  The designated manager's failure to properly fulfill this duty may result in revocation or suspension of their license or civil penalties.  

(1) A mortgage servicer or lender shall:

(a) establish an escrow fund specifically for Montana residential mortgage loans being serviced. The escrow fund must contain only money related to Montana residential mortgage loans; or

(b) elect to provide to the department loan account histories of the residential mortgage loans located in Montana along with the escrow account statements or reports showing how, when, and where those payments were held, applied, and distributed for the period the servicer has serviced the loan.

This rule has been repealed.

This rule has been repealed.

(1) A bona fide not-for-profit entity shall certify that it meets the exemption in 32-9-104(1)(f), MCA, and shall file with the department the Bona Fide Not-For "BFNP" Certification form, to make its certification both initially and annually. 

(2) The Bona Fide Not-For-Profit "BNFP" Certification form dated December 4, 2020, is adopted and incorporated by reference and available on the department's website at banking.mt.gov.

(1) An individual seeking a mortgage loan originator's license shall complete two hours of prelicensing education specific to Montana residential mortgage statutes and rules.

(2) This rule will become effective on March 1, 2014.

(1) An application for initial license submitted to the department through NMLS during the period of November 1 through December 31 is deemed an application for licensure for the next calendar year unless the following conditions are met:

(a) the applicant requests expedited processing of the application and issuance of a license for the remainder of the calendar year in which the application is submitted;

(b) the application is complete and contains no deficiencies; and

(c) the department has sufficient time and staff resources to accommodate the applicant's request during the period November 1 through December 31, which coincides with the renewal period for current licensees. Current licensees' renewal applications are given administrative priority over applications for initial licensure.

(2) If an applicant is approved for licensure during the license renewal period of November 1 through December 31 and requests issuance of a license immediately, the applicant must submit the following renewal application, as appropriate:

(a) Mortgage Loan Originator License Renewal or Reinstatement Application dated December 9, 2020; or

(b) Mortgage Company/Branch Renewal Form dated December 9, 2020.

(3) All licenses expire on December 31 regardless of issuance date. A person whose license has expired may not engage in the activities for which the license was issued. Reinstatement of an expired license is governed by ARM 2.59.1731.

(4) An application for initial license shall be deemed abandoned if the applicant fails to provide the documents or information requested by the department within 60 days of notification to the applicant of the deficiencies.

(a) If the 60-day period following notification of deficiencies has not elapsed by December 31, the application is deemed an application for the next calendar year and will be processed without submission of a new application and fee.

(b) The application shall be deemed abandoned if the requested documents or information are not provided within the remainder of the 60-day period in the new year.

(c) Upon abandonment, the licensing process may be started anew with the submission of a new license application and fee.

(5) The 60-day period for providing documents or information requested by the department applies to persons applying for initial licensure and not to renewal applicants.

(6) The period for applicants to provide documents or information requested by the department listed in (3) is extended by 60 days to allow additional documents or information to be submitted within a total of 120 days of notification to the applicant of deficiencies. This section sunsets on June 1, 2021.  

(1) A person who advertises in any manner is holding themselves out to the public as being able to act as a mortgage loan originator, mortgage broker, mortgage lender, or mortgage servicer in Montana. By so doing, the person expects to engage in the business of a mortgage loan originator, mortgage broker, mortgage lender, or mortgage servicer in Montana within the meaning of 32-9-103(39), MCA.

(2) If a person licensed through the NMLS as a mortgage loan originator, mortgage broker, mortgage lender, mortgage servicer, or similar person in another state acts as a mortgage loan originator, mortgage broker, mortgage lender, or mortgage servicer in Montana, they are regularly engaging in business in Montana within the meaning of 32-9-103(39), MCA.

(1) The word "alter" as used in 32-9-124(1)(l), MCA, means that loan documents may not be revised by:

(a) using correction fluid, correction tape, or any other means of changing or covering over a date or signature not on the original;

(b) inserting a signature or date not on the original; or

(c) making any other change to a document.

(2) To correct an error in a loan document, the licensee shall either:

(a) reprint the document, have it re-signed, and retain the original document noting in the file why the document was reprinted and re-signed; or

(b) strike out the error, put the correct text beside it, and initial and date the change.

(1) The government-sponsored enterprises for the mortgage servicer capital requirements in the Montana Mortgage Act are:

(a) Federal Home Loan Mortgage Corporation (Freddie Mac);

(b) Federal National Mortgage Association (Fannie Mae); or

(c) Federal Home Loan Banks (FHLBs).

(1) If a designated manager supervises more than one location, a mortgage broker or mortgage lender must have a written policy which addresses supervision of multiple licensed locations.

(2) The policy must include the frequency of:

(a) communication between the designated manager and employees in remote locations;

(b) onsite visits by the designated manager to other licensed locations; and

(c) review of employee performance and of work performed.

(3) The policy must include the use of training, technology, and risk assessments by a mortgage broker or mortgage lender in respect to origination activities at licensed locations. A designated manager's role in training, if applicable, must be identified in the policy.

(4) A mortgage broker or mortgage lender must submit a copy of the policy to the department at the time a designated manager is assigned to supervise multiple locations. A mortgage broker or mortgage lender should resubmit a copy of the policy to the department within 30 days of amendments.

(5) The designated manager must attest that he or she has read the policy. This attestation must be signed by the designated manager and included whenever the policy is submitted to the department. The designated manager and all mortgage loan originators and employees of the mortgage broker or mortgage lender at each licensed location subject to the policy shall comply with the policy.

(6) A mortgage broker or lender may submit the information and the policy referenced in (1) through (5) in any format they choose or may use the Designated Manager Supervision Plan form dated July 8, 2020, available on the department's website at www.banking.mt.gov to submit the information.

(1) False, deceptive, or misleading advertising includes but is not limited to advertising or marketing that:

(a) is defined by this rule as false, deceptive, or misleading;

(b) violates 32-9-149, MCA, or this rule;

(c) violates any applicable state or federal unfair, deceptive, or abusive acts or practices laws or other laws applicable to advertising services authorized by or conducted under the Montana Mortgage Act.

(2) An advertisement is false, deceptive, or misleading, if it:

(a) describes rates or fees as "lowest," "best," or other similar words unless the statement is objectively true;

(b) uses the term "free," or any other similar term or phrase that implies there is no cost to the applicant;

(c) offers to procure, arrange, or otherwise assist a borrower to obtain a mortgage loan on terms which the person cannot, does not intend, or does not want to provide, or which the person knows or should know cannot be reasonably provided;

(d) suggests or represents that all or most borrowers may or will qualify for a loan or that persons with bad credit histories or no credit histories may or will qualify for this loan unless the person can demonstrate that borrowers with bad credit or no credit have been routinely and successfully qualified for loans by that licensee; or

(e) fails to disclose that a loan has the potential for negative amortization. If a loan has the potential for negative amortization, the advertisement shall clearly identify that potential and shall prominently disclose the:

(i) market or fully indexed rate;

(ii) term of the reduced payments;

(iii) term of the entire loan; and

(iv) annual percentage rate (APR).

(3) A licensee shall not use advertising materials for the purpose of conveying, or in a manner reasonably calculated to convey, a false impression of sponsorship or approval by a federal, state, or local government agency or in a manner that suggests any affiliation that does not exist. Such advertising is considered false, deceptive, or misleading. Prohibited advertising materials include but are not limited to advertisements that include:

(a) an official-looking emblem, logo, crest, or seal that resembles one used by any state or federal government agency. Such emblems may include an eagle, flag, the Statue of Liberty, or a crest or seal used by any state or the United States or used by any government agency or political subdivision;

(b) images, including those in electronic format, designed to resemble official government communications, such as communications from the Internal Revenue Service or U.S. Treasury, a state taxing authority, or other government agencies;

(c) warnings or notices citing government codes or form numbers not required by the United States Postal Service to be shown on the mailing;

(d) the term "official business," or similar language implying official or government business, without also including the name of the sender;

(e) any suggestion or representation that the solicitor is affiliated with any state or federal agency, municipality, federally insured financial institution, trust company, building and loan association, or other entity that it does not actually represent;

(f) any suggestion or representation that the solicitor is any entity other than the sender itself; or

(g) any other materials that violate state or federal laws pertaining to advertising or unfair, deceptive, or abusive acts or practices.

(4) When an advertisement includes information about a borrower's current loan that the licensee did not obtain from a solicitation, application, or loan, a licensee must provide the borrower with the following information, in the same size type font as the rest of the information in the advertisement:

(a) the name of the source of the information; and

(b) a statement that:

(i) this is an advertisement;

(ii) this is an offer for a new loan;

(iii) the licensee is not affiliated with the borrower's lender; and

(iv) this offer is not related to the consumer's existing mortgage lender or holder of the loan.

(5) A licensee shall not advertise an interest rate unless that rate is actually available at the time of the advertisement. Whenever a specific interest rate is advertised, the mortgage broker must retain a copy of the lender's rate sheet, or other supporting rate information, and the APR calculation for the advertised interest rate.

(6) Licensees are responsible for the legality, accuracy, and reliability of their advertising.

(1) For the purpose of this rule, "Internet" means the Internet, the World Wide Web, or Internet-based electronic information distribution networks, and any derivative delivery systems or evolutions of such delivery systems that may be connected to individual computers, terminals, and other consumer electronic interface devices through which information is delivered via computer servers connected via phone lines or other cable, wire, fiber, wireless, or other analogous linkages to a computer, computer network or networks including, but not limited to, websites, e-mail, text messaging, multimedia advertising, social media, and/or banner advertisements.

(2) Licensees who engage in any form of Internet or electronic advertising shall comply with the requirements of this rule. This rule does not apply to traditional forms of advertising or promotion, such as newspaper, television, or radio advertisements, or direct mailings.

(3) A licensee must provide the following in any Internet or electronic advertising:

(a) the licensee's name as entered into NMLS and NMLS unique identifier; and

(b) if loan originators are named, their NMLS unique identifier must closely follow the names.

(4) A licensee must provide a link to their own NMLS Consumer Access webpage on any of its websites.

(5) If a loan originator maintains a separate website used in any way for or related to mortgage origination activity, the sponsoring licensee's name and NMLS unique identifier must appear on the website.

(6) All web addresses used by licensees must be disclosed by the entity in their NMLS record.

(7) Internet or electronic advertising content used to solicit Montana consumers must comply with all relevant Montana state and federal statutes for specific services and products advertised.

(1)  A mortgage lender, broker, or servicer shall pay to the department the actual cost of any examination or investigation which must include expenses for necessary travel for the purposes of conducting the examination or investigation.

(1)  For purposes of 32-9-124(1)(h), MCA, the department adopts by reference Appendices A through D of 12 CFR 1008 (Regulation H) (July 1, 2022).  The appendices may be found on the department's website at banking.mt.gov.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

This rule has been repealed.

(1) A business and industrial development corporation (BIDCO) licensee shall pay the Division of Banking and Financial Institutions a fee for the cost of conducting the examination of a BIDCO licensee, an affiliate, or subsidiary of the licensee as well as the cost of preparing the examination report. This fee shall be equal to $50 per hour per examiner, plus out-of-pocket costs for travel, lodging, and meals while away from the examiner's place of employment.

(1) �One or more individual incorporators desiring to organize a mutual association shall file with the department, an application for a certificate of authorization for a state-chartered mutual association. �The department adopts and incorporates by reference:�

(a)�the Interagency Charter and Federal Deposit Insurance Application dated July 2021, as the form that shall be completed when applying for a certificate of authorization; and

(b) �the Interagency Biographical and Financial Report dated August 2021, for use by individuals in conjunction with the Interagency Charter and Federal Deposit Insurance Application. �The application and biographical and financial report are available at the department's website at banking.mt.gov.

(2) �An application fee of $10,000 shall be paid to the department at the time of application and thereafter shall not be refundable in whole or in part.

(3) �With the application, the applicant must submit:

(a) �the proposed articles of incorporation and bylaws set forth in 32-2-805 through 32-2-807, MCA;

(b)�an application for reservation of a name in accordance with 35-14-402, MCA, if reservation is desired by the incorporators and has not been previously filed; and

(c)�information to demonstrate the proposed mutual association will satisfy the following requirements:

(i)�a persuasive showing that there is a reasonable public necessity and demand for a new mutual association at the proposed location;

(ii)�that the mutual association will be managed by persons of good moral character and financial integrity who have sufficient management experience to ensure that the mutual association will be operated safely and soundly;

(iii)�a persuasive showing that the new mutual association will have sufficient volume of business to ensure solvency and that establishment of the new mutual association organized under the laws of this state will be in the public interest; and

(iv)�the proposed minimum amount of initial capital contribution to be deposited, which must be set by the commissioner.

(4) �In the event that an application is incomplete in any respect or if additional information is required, the applicants will be so notified by the department and allowed up to 60 days in which to perfect the application or provide additional information. �An extension of this 60-day period may be obtained from the department by showing good cause why it should be extended.

(5) �The department may request additional information from an applicant if, in its discretion, additional information is needed to reach a decision on the application.

�

(1)  In determining whether a reasonable public necessity and demand is established in any case, the department requires that these words be given a meaning which will promote the public interest of the community as a whole in having a sound banking structure, reasonably competitive and adequate for the needs of the community. 

(2)  In making this determination the following are among the factors which the department may consider:

(a)  the number of mutual associations already serving the area in which the proposed mutual association would locate;

(b)  the size of the area;

(c)  the population of the area;

(d)  the wealth of residents of the area;

(e)  the commercial and industrial development of the area;

(f)  the socioeconomic trends of the area;

(g)  the adequacy of the services being provided by existing mutual associations compared to the needs of residents and the services to be offered by the proposed mutual association, including a detailed list of banking services that will be offered the community to be served by the new mutual association;

(h)  the capability of existing mutual associations to handle potential growth of the area;

(i)  the convenience of the location of existing mutual associations to residents of the area as compared to convenience of the proposed mutual association;

(j)  the size of financial institutions in the area;

(k)  the history of financial institutions in the area;

(l)  an indication of the support the proposed mutual association could reasonably expect to receive from representative segments of the businesses and residents of the area; and

(m)  the probability of the success of the proposed mutual association.

(1)  To establish reasonable assurance that the mutual association will be safely and soundly operated as required by 32-2-801, MCA, and recognizing that the ultimate responsibility for management of a mutual association reposes in its board of directors, the department will not issue a certificate of authority to a proposed mutual association if the department finds that any one or more of the proposed directors of the new mutual association has questionable moral character or lack of financial integrity and, therefore, does not command the confidence of the community in which the proposed mutual association is to be located. 

(2)  In the event that the application for a state mutual association charter does not include the name and qualifications of the proposed managing officer, the department will direct that if a charter is to be issued for the proposed mutual association it shall be conditioned upon the submission of the name and qualifications of a proposed managing officer to the department at least 60 days prior to the opening of the mutual association and that the department find the proposed managing officer unobjectionable.

(1) �The applicant must provide a reasonable assurance that the proposed new mutual association will have adequate initial paid-in capital sufficient to:�

(a) �absorb initial operating losses under foreseeable business conditions;

(b) �permit the proposed investment in building, land, furniture, and fixtures within the limitation of 100% of capital and surplus as imposed by 32-2-933, MCA;

(c) �provide protection for depositors' funds to the same extent that the average of all insured mutual associations in the proposed mutual association's peer group provides capital protection, measured by the most current peer group data available on total capital accounts as a percentage of total assets. �The proposed mutual association's reasonably estimated total assets at the end of its first three years of operation shall be the basis upon which this standard shall be projected; and

(d) �enable the mutual association to furnish competitive services that will ensure an amount of business sufficient to assure its success.

�

(1)  To comply with 32-2-801 and 32-2-809, MCA, it has been determined by the department that it is in the public interest to require all mutual associations to be accepted by the Federal Deposit Insurance Corporation (FDIC) for the insurance of deposits.  The department will not issue a certificate of authorization to a proposed new mutual association unless: 

(a)  the department has received official notice that the proposed mutual association has been accepted for insurance of deposits; or

(b)  the department has received satisfactory assurance from the FDIC that the proposed mutual association will be accepted for insurance when the proponents comply with certain stated minor requirements imposed by the FDIC.  Such "minor requirements" must be of a type and character which the department determines can be promptly complied with by the proponents without serious difficulty.

(1)  An operational projection shall be submitted as part of the application for new mutual association charters, in order to show that the new mutual association will remain solvent while meeting the requirements set forth in ARM 2.59.2004.  The pro forma statement will include, at a minimum: 

(a)  a projected three-year comparative balance sheet and income projection;

(b)  information on start-up costs, including legal fees, and other costs that may be amortized; and

(c)  costs associated with fixed assets and their maintenance.

(2)  The statement will reasonably estimate the volume of business the new mutual association anticipates in the first three-year period, and will show its reasons for believing it will develop such business aggregates.

(1) �Upon conversion:�

(a) �the resulting state mutual association succeeds, without other transfer, to all the rights and property of the converted mutual association and is subject to all the debts and liabilities of the converted mutual association in the same manner as if the resulting state mutual association itself had incurred them;

(b) �all rights of creditors of the converted mutual association and all liens upon the converted mutual association's property are unimpaired by the transfer, provided that the liens are limited to the affected property immediately prior to the time when the conversion became effective;

(c) �title to all real, personal, and mixed property owned by the converted mutual association is vested in the resulting state mutual association without reversion or impairment and without the necessity of any instrument of transfer;

(d) �the resulting state mutual association has all the liabilities, duties, and obligations of the converted mutual association, including obligations as fiduciary, personal representative, administrator, trustee, or guardian; and

(e) �any pending action or other judicial proceeding to which the converted mutual association was a party may continue to be prosecuted to final judgment, order, or decree as if the conversion had not occurred, or the resulting mutual association may be substituted as a party to the action or proceeding.

(2) �Upon conversion, a resulting mutual association that is organized under the laws of this state:

(a) �shall designate and operate a location of the converted mutual association as its main banking house; and

(b) �may maintain the branch mutual associations and other offices previously maintained by the converted mutual association.

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(1) The fee for conversion of a federal mutual savings association to a state mutual savings association is $1,500.00.

(1) The department invoices mutual associations for semiannual assessments every June and December.  The assessment is based on each institution's total assets provided in its previous March and September call reports. 

(2)  The fee is calculated based on the total assets of the mutual association multiplied by .0000375, plus the flat fee listed below. 

Example:  Mutual association A reports total assets of $58,873,000 x .0000375 plus $3,000 equals $5,207.74.

(3) The assessment is due 30 days after each invoice date, or July 31 and January 31, whichever is later.

(4) The fee shall not exceed $300,000 for each semiannual assessment.

(5)  In the event of a merger between Montana state-chartered mutual associations during the second or fourth quarter of the year, the assessment fee for the acquired institution must be paid by the surviving institution.

(1)  The department adopts the revised Uniform Financial Institution Rating System as one of its examination procedures.  The edition adopted is the December 19, 1996, edition as published in the Federal Register at 61 Fed. Reg. 67021.  It may be viewed at fdic.gov/news/news/financial/1996/fil96105.pdf.

(1)  The application to merge one or more mutual associations located in Montana or to merge two or more mutual associations doing business in this state must be in the following form: 

MUTUAL ASSOCIATION MERGER APPLICATION

Any individual or entity desiring confidential treatment of specific portions of the application shall specifically identify the information for which they request confidentiality, separately bind it, and label it "Confidential."  The individual or entity shall follow the same procedure for a request for confidential treatment for the subsequent filing of supplemental information to the application.  Inquiries concerning the preparation and filing of this or any other application with the department should be directed to the Montana Division of Banking and Financial Institutions, P.O. Box 200546, Helena, MT 59620-0546.

1.  State the exact corporate name and address of each mutual association participating in the merger, and the proposed names of the resultant mutual association.

2.  State the name and address of, and the dates of publication in, the newspapers in which the required notice is published.

3.  For the resultant mutual association, a list of the names of the directors and principal executive officers, their titles, including a brief resume of the educational background, banking experience, and other qualifications of each and an explanation of the extent of common management of the participating institution and the length of time such common ownership or management has existed.

4.  The date on which the proposed merger is to occur.

5.  Attach the following documents:

(a)  the resolution or an authentic copy of the resolution, authorizing the merger adopted by a majority of the board of directors;

(b)  the terms and conditions of the proposed merger;

(c)  the manner and basis of converting the shares of each merging association into shares of the surviving association;

(d)  a statement of any changes in the articles of incorporation of the surviving association to be effected by the merger;

(e)  other provisions with respect to the proposed merger deemed necessary or desirable; and

(f) the proposed articles of merger and plan of merger.

(2)  An application fee of $2,000 plus $200 for each mutual association involved in the merger must be paid to the department at the time of application and may not be refunded in whole or in part.

(3)  If an application is incomplete in any respect, or if additional information is required, the department shall notify the applicant and the applicant will be allowed up to 30 days in which to perfect the application or to provide additional information.  An extension of this 30-day period may be obtained from the department by showing good cause why it should be extended.  The department may delay processing, including extending the comment period for good cause.

(4)  The application must be in letter form addressed to the commissioner of the department.

(5)  The department will preliminarily approve or deny merger applications within 30 days of receiving a completed application.

(6) Within 90 days of the preliminary approval, the board of directors of the merging association shall submit the proposed merger to a vote of the members at any regular meeting or at any special meetings called for that purpose, after notice of the proposed merger has been given to all members entitled to vote thereon, in the manner provided in the bylaws. The notice of the meeting shall be in writing stating the purpose or purposes of the meeting and include or be accompanied by a copy or summary of the plan of merger. At the meeting, members may vote upon the proposed merger in person, or by written proxy, or by mailed ballot. The affirmative vote of the majority of the members voting thereon, shall be required for approval of the plan of merger. If the total vote of the association upon the proposed merger shall be less than 25% of the total membership of such association, the merger shall not be approved.

(7)  Within 10 days of the membership vote, the board of directors shall certify the result to the department.

(8)  Within 10 days after receipt of the certification, the department shall issue its final approval or denial of the application, based on the result of the membership vote.

(1)  An application to merge one or more mutual associations located in Montana pursuant to 32-2-827, MCA, must be on the form in ARM 2.59.2017. 

(2)  The application to merge must be filed with the department.

(3) The election and acknowledgment information satisfies these standards if it conforms to the following requirements:

(a) if the sale of a contract occurs by telephone, the customer's affirmative election to purchase may be made orally, provided that the mutual association:

(i) maintains sufficient documentation to show that the customer received the short-form disclosures substantially similar to ARM 2.59.2047(1) and then affirmatively elected to purchase the contract;

(ii) mails to the customer the affirmative written election and written acknowledgment together with a long-form disclosure substantially similar to ARM 2.59.2047(2), within three business days after the telephone solicitation, and maintains sufficient documentation to show it made reasonable efforts to obtain the documents from the customer; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the mutual association has mailed the long-form disclosures to the customer;

(b) if the contract is solicited through written materials such as mail inserts or "take one" applications and a mutual association provides only the short-form disclosures in the written materials, then the mutual association shall mail the acknowledgment of receipt of disclosures, together with a long-form disclosure as provided under ARM 2.59.2047(2), to the customer within three business days, beginning on the first business day after the customer contacts the mutual association or otherwise responds to the solicitation. A mutual association may not obligate the customer to pay for the contract until after the mutual association has received the customer's written acknowledgment of receipt of disclosures unless the mutual association:

(i) maintains sufficient documentation to show that the mutual association provided the acknowledgment of receipt of disclosures to the customer;

(ii) maintains sufficient documentation to show that the mutual association made reasonable efforts to obtain from the customer a written acknowledgment of receipt of the long-form disclosures; and

(iii) permits the customer to cancel the purchase of the contract without penalty within 30 days after the mutual association has mailed the long-form disclosures to the customer.

(4)  An applicant for approval of a merger transaction shall publish notice of the proposed transaction on at least three occasions at approximately equal intervals in a newspaper of general circulation in the community or communities where the main offices of the merging institutions are located; or, if there is no such newspaper in the community, then in the newspaper of general circulation published nearest to the community.

(a)  The first publication of the notice must be as close as practicable to the date on which the application is filed with the department, but no more than five days before the filing date.

(b)  The last publication of the notice must be on the 25th day after the first publication; or, if the newspaper does not publish on the 25th day, on the publication date closest to the 25th day.

(5)  The text of the public notice must include the following information:

(a)  that an application for merger has been made to the Montana Commissioner of Banking and Financial Institutions;

(b)  the name and address of all the parties to the merger;

(c)  the identity of the surviving institution;

(d)  that the public may submit comments to the Commissioner, Montana Division of Banking and Financial Institutions, P.O. Box 200546, Helena, Montana 59620-0546;

(e)  the closing date of the public comment period; and

(f)  that the nonconfidential portions of the application are on file with the department and are available for public inspection during regular business hours.

(6)  The comment period must be 30 days.

(7)  The notice may be combined with any notice of an applicable state or federal regulator and published jointly.

(8)  Where public notice is required, the department may determine on a case-by-case basis that unusual circumstances surrounding a particular filing warrant modification of the publication requirements.

(9)  The applicant(s) shall provide the affidavit(s) of publication to the department after it is received.

(1)  Under authority granted by 32-2-824, MCA, the department permits state mutual associations to engage in the business of direct leasing of personal property under the following regulations: 

(a)  A mutual association may purchase personal property to be leased only after it has a valid and binding commitment from the prospective lessee to lease the specific property under terms acceptable to the mutual association.

(b)  Lease agreements with any one lessee may not exceed 10% of the assets of the mutual association.  If the lessee is also a borrower from the mutual association, this 10% must be reduced by the balance of loans to the lessee.

(c)  Every lease agreement must provide for full payout to the mutual association of its full acquisition cost of the lease property during the initial term of the lease.

(d)  Residual value of the property at the end of a lease agreement's original term may be considered by the mutual association to constitute partial recovery of its cost of acquisition if such residual value is not more than 25% of the cost of acquisition.

(e)  No lease agreement shall extend for an initial period of more than ten years or the leased property's normal useful life, whichever is less, unless the mutual association receives from the department prior written approval of each lease agreement of longer term.

(f)  Each lease agreement must include provisions whereby the lessee disclaims any liability of the mutual association for the condition of the leased property or its quality; and whereby the lessee assumes full responsibility for protection and maintenance of the leased property.