Amends TCA Section 9-1-107.
Under present law, counties, municipalities, districts, other public or quasi-public corporations; public officials, boards, and agencies; or other public or quasi-public entities, other than the state, are authorized to invest or deposit funds held by them, including sinking funds and pension and retirement funds, in accounts of federal savings banks, whose deposits are insured by the FDIC. Deposits in excess of the limits of insurance on those accounts are authorized when the collateral given meets certain requirements; is an irrevocable letter of credit issued by the federal savings bank; or consists of a promissory note secured by a first mortgage or first deed of trust upon a residential property located in Tennessee, if:<br /> <br /> (1) The promissory note is at all times an amount in value at least 50 percent in excess of the amount deposited with the bank;<br /> <br /> (2) The bank is able to exercise, enforce, or waive any right of power granted to it by the promissory note, deed of trust, or mortgage, as long as the security for the note is not released or diminished in value; <br /> <br /> (3) The following is not used as security for deposits: any promissory note on which payment is more than 90 days past due; any promissory note secured by a mortgage deed of trust in which there is lien prior to the mortgage or deed of trust; or any promissory note secured by a mortgage or deed of trust to which a notice of default has been recorded or an action commenced; <br /> <br /> (4) The bank promptly substitutes collateral meeting the previous requirements that is sufficient to cover the deposits to be secured if the security or any note is released, diminished in value by action of the bank, or becomes delinquent; and <br /> <br /> (5) Deposits in excess of the limits on the insurance are limited to no more than 5 percent of the assets of the bank with respect to each depositor, and limited to no more than 10 percent of the assets of the association with respect to all depositors. <br /> <br /> This bill removes the ability to use collateral consisting of a promissory note secured by a first mortgage or first deed of trust upon a residential property located in Tennessee for deposits in excess of the limits of insurance on those accounts.<br />
Under present law, counties, municipalities, districts, other public or quasi-public corporations; public officials, boards, and agencies; or other public or quasi-public entities, other than the state, are authorized to invest or deposit funds held by them, including sinking funds and pension and retirement funds, in accounts of federal savings banks, whose deposits are insured by the FDIC. Deposits in excess of the limits of insurance on those accounts are authorized when the collateral given meets certain requirements; is an irrevocable letter of credit issued by the federal savings bank; or consists of a promissory note secured by a first mortgage or first deed of trust upon a residential property located in Tennessee, if:<br /> <br /> (1) The promissory note is at all times an amount in value at least 50 percent in excess of the amount deposited with the bank;<br /> <br /> (2) The bank is able to exercise, enforce, or waive any right of power granted to it by the promissory note, deed of trust, or mortgage, as long as the security for the note is not released or diminished in value; <br /> <br /> (3) The following is not used as security for deposits: any promissory note on which payment is more than 90 days past due; any promissory note secured by a mortgage deed of trust in which there is lien prior to the mortgage or deed of trust; or any promissory note secured by a mortgage or deed of trust to which a notice of default has been recorded or an action commenced; <br /> <br /> (4) The bank promptly substitutes collateral meeting the previous requirements that is sufficient to cover the deposits to be secured if the security or any note is released, diminished in value by action of the bank, or becomes delinquent; and <br /> <br /> (5) Deposits in excess of the limits on the insurance are limited to no more than 5 percent of the assets of the bank with respect to each depositor, and limited to no more than 10 percent of the assets of the association with respect to all depositors. <br /> <br /> This bill removes the ability to use collateral consisting of a promissory note secured by a first mortgage or first deed of trust upon a residential property located in Tennessee for deposits in excess of the limits of insurance on those accounts.<br />
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