MISSISSIPPI LEGISLATURE

2000 Regular Session

To: Banks and Banking; Ways and Means

By: Representative Guice

AN ACT TO AMEND SECTION 27-21-3, MISSISSIPPI CODE OF 1972, TO EXEMPT CERTAIN LOANS FROM THE FINANCE COMPANY PRIVILEGE TAX; TO AMEND SECTION 75-67-121, MISSISSIPPI CODE OF 1972, TO PROVIDE THAT THE LICENSEE SHALL NOT CHARGE THE BORROWER FOR BOTH CREDIT LIFE INSURANCE AND NONCREDIT TERM LIFE INSURANCE AS PART OF THE SAME UNDERLYING LOAN; TO AMEND SECTION 75-67-135, MISSISSIPPI CODE OF 1972, TO EXEMPT CERTAIN LOANS FROM THE SMALL LOAN REGULATORY LAW AND TO PROVIDE THAT THE SMALL LOAN REGULATORY LAW SHALL NOT LIMIT THE AMOUNT OR TYPE OF ANY NONCREDIT TERM LIFE INSURANCE POLICIES THAT A LICENSEE UNDER SUCH LAW MAY SELL TO A BORROWER UNDER CERTAIN CONDITIONS; TO AMEND SECTION 75-67-241, MISSISSIPPI CODE OF 1972, TO EXEMPT CERTAIN LOANS FROM THE SMALL LOAN PRIVILEGE TAX LAW; AND FOR RELATED PURPOSES.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MISSISSIPPI:

SECTION 1. Section 27-21-3, Mississippi Code of 1972, is amended as follows:

27-21-3. There is hereby levied a statewide privilege tax upon every person, firm, corporation, or association, other than banks, state or national, doing business of lending money secured by mortgages, trust receipts, retained-title or purchase contracts, on motor vehicles, furniture, refrigerators containing mechanical freezing units operated by gas or electricity, or radios or any other tangible personal property, located in the State of Mississippi, or doing a business of purchasing, discounting, or otherwise acquiring notes, trust receipts, or other forms of indebtedness secured by liens, in the form of mortgages, retained-title or purchase contracts, or other liens, upon motor vehicles, furniture, refrigerators containing mechanical units operated by gas or electricity or other fuels, or radios or any other tangible personal property, located in this state (not including, however, cotton, cotton seed or agricultural products); the amount of said tax to bear a direct relationship to the value of the securities held, owned, or acquired by such person, firm, corporation or association, and exacted in return for the protection afforded by the government and laws of this state in the enjoyment of such ownership and rights acquired thereby; the tax to be computed by application of the rate hereinafter set out to the total value of such securities, other than those securities representing loans for the payment of the wholesale sales price and those securities representing transactions known as "floor plan," upon which no tax is to be imposed. Provided, however, that the tax imposed in this chapter shall not apply to (a) persons, firms or corporations engaged in the general mercantile business, who make advancements of money, merchandise and supplies to their customers and who take mortgages, deeds of trust or other liens upon personal property to secure the payment of the indebtedness thus incurred; * * * (b) a member of an affiliated group as defined by Section 1504 of the Internal Revenue Code of 1986, as amended, on July 1, 1995, with respect to loans made by one (1) member of the affiliated group to another and who is not otherwise engaged in the business of loaning money secured by tangible personal property; or (c) loans which are secured by mortgages, security interests, trust receipts, retained-title, contracts, purchase contracts or other liens on real property.

SECTION 2. Section 75-67-121, Mississippi Code of 1972, is amended as follows:

75-67-121. Any licensee hereunder may charge any borrower on loans of One Hundred Dollars ($100.00) or more the actual cost of recording any instrument executed as security for a loan; any reasonable fee paid to an attorney for investigating the title to any property given as security for a loan; the actual cost of any premium paid for insurance upon any property given as security for a loan, such insurance to be placed with an insurance company agent of the borrower's selection so long as it is licensed to do business in the State of Mississippi; the actual cost of any premium paid for life, health and/or accident insurance on any borrower where the amount of insurance required is not in excess of the amount of the loan and the premium therefor is in keeping with that usually and customarily paid for like insurance. However, the licensee shall not charge the borrower for both credit life insurance premiums and noncredit term life insurance premiums as part of the same underlying loan as provided in Section 75-67-135, as amended by House Bill No. , 2000 Regular Session.

Whenever he shall find it necessary, the Commissioner of Banking and Consumer Finance shall have the power to adopt and enforce reasonable rules and regulations to prevent the abuse of this section and the making of excessive charges hereunder.

SECTION 3. Section 75-67-135, Mississippi Code of 1972, is amended as follows:

75-67-135. (1) This article shall not apply to any person, firm, partnership, corporation or association doing business under any of the laws of this state relating to banks, savings banks, trust companies, building and loan associations, insurance companies, pawnbrokers or credit unions; nor shall this article apply to any person, firm, partnership, corporation or association concerning loans made to the employees or farm tenants of such person, firm, partnership or corporation or association; nor to loans or advances made to be used in or in the furtherance of farming or agricultural operations; nor to loans insured or guaranteed by the United States or any of its agencies; nor to persons, firms, partnerships, associations or corporations making loans only secured by real estate; nor to dealers and sellers or purchasers of conditional sales or retained title contracts on real or personal property; nor an occasional lender not regularly engaged in the business of lending money, but such lender shall be governed by the usury statutes of this state; nor in the case of any loan that is exempt from the federal Truth in Lending Act and Regulation Z.

(2) Nothing in this article shall limit the amount or type of any noncredit term life insurance policies which a licensee may sell to a borrower, nor the premium for any such insurance, if the following conditions are met:

(a) The licensee is qualified to do business in Mississippi as provided by Section 83-17-105 et seq.;

(b) The licensee does not require the purchase of the noncredit term life insurance product as a condition of receiving the loan or any extension of credit from the licensee;

(c) The licensee does not make the borrower's ability to obtain any current or future loan or other extension of credit from the licensee contingent upon the borrower's agreement to purchase the noncredit term life insurance product or otherwise transact business with the licensee;

(d) The licensee allows the borrower the option of paying the cost of the noncredit term life insurance product using funds other than the proceeds of a loan obtained from the licensee or having the cost of the noncredit term life insurance product deducted from the proceeds of any loan obtained from the licensee; and

(e) The licensee does not allow a noncredit term life insurance policy to be sold to a borrower if such borrower has purchased a credit life insurance policy as part of the same underlying loan.

This subsection shall not apply to sales of credit insurance, nor the limits on credit life insurance, as provided by Section 75-67-121.

SECTION 4. Section 75-67-241, Mississippi Code of 1972, is amended as follows:

75-67-241. This article shall not apply to any person, firm, partnership, corporation or association doing business under any of the laws of this state relating to banks, savings banks, trust companies, building and loan associations, insurance companies, credit unions or pawnbrokers; nor shall this article apply to any person, firm, partnership, corporation or association concerning loans made to the employees or farm tenants of such person, firm, partnership or corporation or association; nor to loans or advances made to be used in or in the furtherance of farming or agricultural operations; nor to loans insured or guaranteed by the United States or any of its agencies; nor to persons, firms, partnerships, associations or corporations making loans only secured by real estate; nor to dealers and sellers or purchasers of conditional sales or retained title contracts on real or personal property; nor a member of an affiliated group as defined by Section 1504 of the Internal Revenue Code of 1986, as amended, on May 24, 1995, with respect to loans made by one (1) member of the affiliated group to another and who is not otherwise engaged in the business of loaning money secured by tangible personal property; nor an occasional lender not regularly engaged in the business of lending money, but such lender shall be governed by the usury statutes of this state; nor in the case of any loan that is exempt from the federal Truth in Lending Act and Regulation Z.

SECTION 5. This act shall take effect and be in force from and after July 1, 2000.