Chapter 107 Oregon Laws 1999

Session Law

AN ACT

SB 283

Relating to financial institutions; creating new provisions; and amending ORS 295.025, 696.527, 696.606, 706.005, 706.015, 706.720, 709.005, 722.048, 722.122, 722.202, 722.352, 722.419, 722.436, 722.444, 722.504, 733.654 and 750.685.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 706.005 is amended to read:

706.005. As used in the Bank Act, unless the context requires otherwise:

(1) "Access area" means any paved walkway or sidewalk within 50 feet of an automated teller machine or night deposit facility. "Access area" does not include publicly maintained sidewalks or roads.

(2) "Access device" means:

(a) An "access device" as defined in Federal Reserve Board Regulation E (12 C.F.R. Part 205) adopted under the Electronic Fund Transfer Act (15 U.S.C. 1601, et seq.); or

(b) A key or other mechanism issued by a financial institution to a customer to give the customer access to the institution's or bank's night deposit facility.

(3) "Acquisition transaction" means:

(a) The sale and purchase of all or substantially all of the assets of a bank that is not in the ordinary course of business of such bank; or

(b) The transfer and assumption of all or substantially all of the liabilities of a bank.

(4) "Automated teller machine" or "ATM" means any electronic information processing device located in this state that:

(a) Accepts or dispenses cash in connection with a credit, deposit or convenience account, provides information and initiates transactions in accordance with the request or instruction of a customer or the customer's agent; and

(b) Is unstaffed except for persons installing the device, providing security or providing periodic servicing, maintenance or repair. The term does not include devices used solely to facilitate check guarantees or check authorizations, or used in connection with the acceptance or dispensing of cash on a person to person basis, such as by a store cashier.

(5) "Bank Act" means ORS chapters 706 to 716.

(6) "Banking business" or "business of banking" means the business of receiving or accepting money or its equivalent on deposit as a regular business whether the deposit is made subject to check or is evidenced by a certificate of deposit, a pass book or other writing or evidence, but does not include:

(a) Depositing money or its equivalent in escrow or with an agent, pending investments in real estate or securities for or on account of a principal;

(b) The business of a savings and loan association or a credit union;

(d) Accepting deposits through an ATM or night deposit facility.

(7) "Banking day" has the meaning given that term in ORS 708A.650.

(8) "Branch" means an office or other place, except a principal place of business or an ATM, at which:

(a) A bank engages in banking business; or

(b) A trust company transacts trust business.

(9) "Candlefoot power" means a light intensity of candles on a horizontal plane at 36 inches above ground level and 5 feet in front of the area to be measured.

(10) "Capital debentures" means capital notes, capital debentures and any other form of unsecured obligations issued by an institution or stock savings bank to evidence borrowings where the rights of the lender are subordinate to the rights of the depositors.

(11)(a) "Defined parking area" means that portion of any parking area opened for customer parking that is:

(A) Contiguous to the access area of an ATM or night deposit facility;

(B) Regularly, principally and lawfully used for parking by users of the ATM or night deposit facility while the users conduct transactions during hours of darkness; and

(C) Owned or leased by the operator of the ATM or night deposit facility or owned or controlled by the party leasing the ATM or night deposit facility site to the operator.

(b) "Defined parking area" does not include any parking area that is not open or regularly used for parking by users of the ATM or night deposit facility who are conducting transactions during the hours of darkness. A parking area is not open if it is physically closed to access or if conspicuous signs indicate that it is closed. If a multiple level parking area satisfies the conditions of paragraph (a) of this subsection and would therefore otherwise be a defined parking area, only the single parking level designated by the operator of the ATM and night deposit facility to be the most directly accessible to the users of the ATM and night deposit facility shall be a defined parking area.

(12) "Department" means the Department of Consumer and Business Services.

(13) "Director" means the Director of the Department of Consumer and Business Services.

(14) "Document of title" means document of title as defined in ORS 71.2010.

(15) "Federal Reserve Act" means the Act of Congress approved December 23, 1913 (38 Stat. 251), as amended.

(16) "Federal Reserve Bank" means the Federal Reserve Banks created and organized under the authority of the Federal Reserve Act.

(17) "Federal Reserve Board" means the Federal Reserve Board created and described in the Federal Reserve Act.

(18) "Home state" means:

(a) With respect to a state bank, the state under the laws of which the state bank is incorporated or otherwise organized;

(b) With respect to a federal bank, the state in which the main office of the federal bank is located;

(c) With respect to an extranational institution, the state determined to be the home state by election of the extranational institution, or in default of such election, by the Board of Governors of the Federal Reserve System; and

(d) With respect to a bank holding company, the state in which the total deposits of all banking subsidiaries of such company are the largest on the date on which the company becomes a bank holding company.

(19) "Hours of darkness" means the period that commences 30 minutes after sunset and ends 30 minutes before sunrise.

(20) "Loan production office" means a physical location in this state at which representatives of a financial institution hold themselves out to the public as providing loan origination services, leasing services or services of a similar nature, but at which representatives of the financial institution do not conduct banking business.

[(20)] (21) "Merger" includes consolidation.

[(21)] (22) "Night deposit facility" means a receptacle that is provided by a financial institution for the use of the institution's customers in delivering cash, checks and other items to the financial institution.

[(22)] (23) "Obligations" includes:

(a) The direct liability of the maker or acceptor of paper discounted with or sold to an institution;

(b) The liability of the drawer, indorser or assignor;

(c) If obligations of a copartnership or association, the obligations of the several members of the copartnership or association;

(d) If obligations of a corporation, the obligations of all subsidiaries of the corporation in which the corporation owns or controls 50 percent or more of the capital stock; and

(e) The liability of a lessee under a lease.

[(23)] (24) "Officer" of a banking institution means a chief executive officer, president, any vice president, secretary, treasurer or cashier.

[(24)] (25) "Operator" means any financial institution or other business entity, or any person who operates an ATM or night deposit facility.

[(25)] (26) "Paid-in capital" means the aggregate amount received by an institution or stock savings bank from the issuance of its stock or transferred from retained earnings.

[(26)] (27) "Person" means an individual, corporation, limited liability company, partnership, association, joint stock company, business trust or unincorporated organization.

[(27)] (28) "Stockholders' equity" means the aggregate of paid-in capital and retained earnings of an institution or Oregon stock savings bank.

[(28)] (29) "Trust business" means:

(a) Acting as a trustee of a trust, as defined in ORS 128.005;

(b) Acting as a fiduciary, as defined in ORS 125.005;

(d) Acting as a receiver, trustee or assignee for the benefit of creditors; or

(e) Acting in a court-appointed position of trust or any other position of trust.

SECTION 1a. ORS 706.015 is amended to read:

706.015. References in the Bank Act to federal statutes and regulations shall, except as otherwise provided in the Bank Act, be construed to refer to the statutes or regulations as they are in effect on [October 4, 1997] the effective date of this 1999 Act. The Director of the Department of Consumer and Business Services may adopt rules providing that one or more of the federal statutes and regulations shall be construed to refer to the statutes and regulations as they are in effect on a later date.

SECTION 2. ORS 706.720 is amended to read:

706.720. (1) The Director of the Department of Consumer and Business Services shall receive and file in the Department of Consumer and Business Services all reports required by the Bank Act.

(2) Except as provided in subsection (3) of this section and ORS 706.730, the records of the Department of Consumer and Business Services pertaining to the administration of the Bank Act are available for public inspection unless the director determines in the particular instance that the public interest in disclosure of the records is outweighed by the interests of an Oregon operating institution or its directors, stockholders, officers, employees and customers in keeping the records confidential, or that the records are exempt from disclosure under ORS 192.501 to 192.505. A determination by the director under this subsection is subject to review under ORS 192.410 to 192.505.

(3) Except as provided in subsections (4) and (5) of this section, the following records of the department are exempt from disclosure or production:

(a) Examination reports and work papers, directives, orders and correspondence that relate to examination reports.

(b) Investigatory information concerning persons subject to investigation by the director under ORS 707.070, 707.080, 707.110, 707.140, 707.145, 707.155 or 707.705 and financial statements of such persons.

(d) Reviews of financial statements submitted to the director.

(e) Reports filed under ORS 706.655.

(f) Stockholder lists.

(4) Notwithstanding subsection (3) of this section, the director may disclose any record of the department specified in this subsection pertaining to an Oregon operating institution that has been liquidated under ORS 711.400 to 711.615 if the director determines in the particular instance that the public interest in disclosure of the record outweighs the interests of the Oregon operating institution or its directors, stockholders, officers, employees or customers in keeping the record confidential. Under no circumstances, however, shall the director disclose any such record or portion thereof that contains any proprietary information or any information relating to the individual financial activities or affairs of persons unless the director concludes that those activities or affairs were a direct and substantial contributing factor in the failure of the Oregon operating institution. This subsection applies to the following records of the department:

(a) Examination reports and work papers, directives, orders and correspondence relating to examination reports;

(b) Investigatory information concerning persons subject to investigation by the director under ORS 707.070, 707.080, 707.110, 707.140, 707.145, 707.155 or 707.705;

(d) Reports filed under ORS 706.655.

(5) Notwithstanding ORS 40.270, an officer of the department may be examined concerning records that are exempt from disclosure under subsection (2) or (3) of this section and ORS 706.730 and the records are subject to production if the court before which a civil or criminal action is pending finds that such examination and production is essential for establishing a claim or defense. In making a finding under this subsection, if the court views the records, the court shall do so in camera.

(6) A civil penalty imposed by the director under the Bank Act shall become subject to public inspection after the 20th day after the director imposes the civil penalty.

(7) All records of the department pertaining to the condition of Oregon operating institutions may be furnished to:

(a) The Federal Reserve Bank and its examiners.

(b) The Comptroller of the Currency of the United States and national bank examiners.

(d) The Federal Home Loan Bank of which the operating institution is a member or to which the operating institution has applied for membership.

[(d)] (e) The State Treasurer if the Oregon operating institution is a depository of public fund deposits.

[(e)] (f) Any supervisory authority that regulates financial institutions or bank holding companies.

[(f)] (g) The respective Oregon operating institution, or the bank holding company that controls an Oregon operating institution.

(8) The director shall prescribe and furnish to interested persons the forms for all reports required by the Bank Act.

(9) If the director is requested to disclose any record subject to this section and the record contains both material that is exempt from disclosure under this section or any other provision of law and material that is not exempt from disclosure, the director shall separate the exempt and nonexempt material and shall disclose only the nonexempt material.

SECTION 3. ORS 709.005 is amended to read:

709.005. (1) Except as provided in ORS 709.030 (4) or in subsection (4) of this section, no company shall transact any trust business in this state until the company has obtained a certificate of authority from the Director of the Department of Consumer and Business Services under this section, authorizing the company to transact trust business in this state.

(2) To procure a certificate of authority to transact trust business in this state, a company to whom this section applies shall file a written application with the director, which shall contain or be accompanied by:

(a) The name of the company.

(b) The state or country under the laws of which the company is organized.

(d) The period of duration of the company, if the duration is not perpetual.

(e) A mailing address to which the director may send notices.

(f) The address of the principal office of the company in the state or country under the laws of which it is organized.

(g) The street address of the proposed registered office of the company in this state and the name of its proposed registered agent, who shall be amenable to service of process at that address.

(h) A brief statement setting forth any background and experience of the company in conducting a trust business in the state or country in which it is organized, and its qualifications to transact trust business in this state.

(i) The names and addresses of the chief executive officer and the secretary of the company.

(j) Any additional information that the director may by rule require.

(k) The verified signature of the chief executive officer of the company, certifying that all information contained in the application is true, accurate and complete.

(L) A certificate of existence, a certificate of good standing, a status certificate or a document of similar import, current within 60 days of making application under this section and duly authenticated by the official with custody of the corporate or other records in the state, province or country under the laws of which the company is organized[, evidencing the authorization of the company to transact business as a foreign corporation under ORS 60.701 to 60.731].

(m) A certificate of authorization for a foreign corporation, or a copy of the application for authority to transact business in this state as a foreign corporation as filed with the Secretary of State, current within 60 days of making application under this section and duly authenticated by the Secretary of State evidencing the authorization of the company, or application for authorization, to transact business as a foreign corporation under ORS chapter 60.

[(m)] (n) An application fee of $2,500, provided that no application fee shall be charged under this paragraph:

(A) If the applicant is concurrently applying for a charter under ORS chapter 707; or

(B) If the director reduces or waives the application fee.

(3) If the director finds that the application conforms to the requirements of subsection (2) of this section and that the applicant is qualified by experience to transact trust business in this state, the director shall direct the applicant to make the security deposit required under ORS 709.030, and when the deposit is made, the director shall issue and send to the company a certificate of authority to transact business.

(4) The requirement to procure a certificate of authority under this section shall not apply to the extent preempted by federal law, or to any bank lawfully transacting trust business in this state on October 4, 1997.

SECTION 4. Section 5 of this 1999 Act is added to and made a part of ORS chapter 708A.

SECTION 5. (1) A financial institution shall file a notice with the Director of the Department of Consumer and Business Services within 30 days of establishing a loan production office in this state. The notice shall include:

(a) The name of the financial institution and address of the main office;

(b) The name and address of the loan production office; and

(c) The name and address of the officer of the financial institution responsible for loan production office activities.

(2) A notice shall be filed for each loan production office in this state.

(3) Each notice filed under subsection (1) of this section shall be:

(a) Accompanied by a nonrefundable fee of $100.

(b) Amended when there is a material change in the information provided pursuant to subsection (1) of this section. No fee is required for amendments.

(4) A financial institution shall notify the director of the closure of a loan production office in this state, the date of closure and the disposition of any records previously maintained at the loan production office subject to closure. No fee is required for a notice of closure.

SECTION 6. ORS 722.122 is amended to read:

722.122. Insofar as ORS 722.116 and 722.118 are not inconsistent with federal law, they apply to a federal association whose principal office is located in this state and to the members thereof, except that the request permitted by ORS 722.118 (5) shall be submitted to the Federal [Home Loan Bank] Housing Finance Board, Washington, D.C., in the case of a federal association and forwarded to members only upon the order and direction of that board.

SECTION 7. ORS 722.419 is amended to read:

722.419. (1) Except as provided in subsections (2) and (3) of this section, the records of the Department of Consumer and Business Services pertaining to the administration of this chapter are available for public inspection unless the Director of the Department of Consumer and Business Services determines in the particular instance that the public interest in disclosure of the records is outweighed by the interests of an association or its directors, officers, employees, members and customers in keeping the records confidential, or that the records are exempt from disclosure under ORS 192.501 to 192.505. A determination by the director under this subsection is subject to review under ORS 192.410 to 192.505.

(2) Except as provided in subsections (6) and (7) of this section, the following records of the department pertaining to the administration of this chapter are exempt from disclosure or production:

(a) Examination reports and work papers, directives, orders and correspondence that relate to examination reports.

(b) Investigatory information concerning persons subject to investigation by the director under ORS 722.024, 722.026, 722.036, 722.134, 722.459 or 722.506, and financial statements of such persons.

(d) Audits submitted to the director under ORS 722.434 (3).

(e) Reports submitted to the director under ORS 722.458.

(f) Stockholder lists.

(3) The director or any other person employed by the department and acting under this chapter shall not knowingly disclose the name of any person who is a depositor or debtor of an association, or the amount of the person's deposit or debt, except that the director or the employee may disclose such information as may be necessary in the performance of the director's or employee's official duty including any duty under ORS 295.018.

(4) Statements of financial condition filed under ORS 722.434 (1) are not confidential.

(5) A civil penalty imposed by the director shall become subject to public inspection after the 20th day after the director imposes the civil penalty.

(6) Notwithstanding subsection (2) of this section, the director may disclose any record of the section specified in this subsection pertaining to an association that has been liquidated if the director determines in the particular instance that the public interest in disclosure of the record outweighs the interests of the association or its directors, stockholders, officers, employees or customers in keeping the record confidential. Under no circumstances, however, shall the director disclose any such record or portion thereof that contains any proprietary information or any information relating to the individual financial activities or affairs of persons unless the director concludes that those activities or affairs were a direct and substantial contributing factor in the failure of the association. This subsection applies to the following records of the section:

(a) Examination reports and work papers, directives, orders and correspondence relating to examination reports;

(b) Investigatory information concerning persons subject to investigation by the director under ORS 722.024, 722.026, 722.036, 722.134, 722.459 or 722.506;

(d) Reports filed under ORS 722.458.

(7) Notwithstanding ORS 40.270, an officer of the department may be examined concerning records that are exempt from disclosure under subsection (1), (2) or (3) of this section and the records are subject to production if the court before which a civil or criminal action is pending finds that such examination and production is essential for establishing a claim or defense. In making a finding under this subsection, if the court views the records, the court shall do so in camera.

(8) All records of the department pertaining to the condition of associations may be furnished to:

(a) Representatives of savings and loan departments of other states.

(b) Representatives of [the Federal Home Loan Bank Board,] the Federal Housing Finance Board, Washington, D.C., a Federal Home Loan Bank or other federal or state financial agency organized under the laws of the United States or of this state and authorized to loan to or otherwise act as a reserve or insuring agency for savings associations.

SECTION 8. ORS 722.436 is amended to read:

722.436. (1) Except as provided under subsections (4) and (5) of this section, every two years, or more often if the Director of the Department of Consumer and Business Services considers it advisable, the director, either in person or through an examiner, shall make an examination of the books, records and affairs of every domestic and foreign association.

(2) The examiner shall prepare a report of the examiner's findings and file it with the director. The examiner shall include in the report any violation of law or any unauthorized or unsafe practices of the association disclosed by the examination.

(3) The director shall furnish a copy of the report to the association examined and, upon request, may furnish a copy of or excerpts from the report to the Federal [Home Loan Bank] Housing Finance Board, Federal Home Loan Bank or other federal or state agency authorized to loan to or otherwise act as an insuring agency for savings and loan associations. When the director furnishes a copy of a report of an association to an agency under this subsection, the director shall immediately inform the association of the agency making the request and the part of the report furnished.

(4) The director may participate in any program offered by the Federal [Home Loan Bank] Housing Finance Board, a Federal Home Loan Bank or the Federal [Savings and Loan] Deposit Insurance Corporation that provides for joint alternate examinations of savings associations by the director and the Federal [Home Loan Bank] Housing Finance Board, a Federal Home Loan Bank or the Federal [Savings and Loan] Deposit Insurance Corporation.

(5) Instead of performing an examination under subsection (1) of this section, the director may accept an examination or report made by the Federal [Home Loan Bank] Housing Finance Board or [the] a Federal Home Loan Bank or by the regulator of savings associations in another state.

SECTION 9. ORS 722.444 is amended to read:

722.444. (1) The Director of the Department of Consumer and Business Services may cause property owned by an association or securing the loans of an association to be appraised when, in connection with an examination or otherwise, information with respect to any property or policies, practices, operating results and trends of an association give evidence that:

(a) Any appraisal or valuation of the association may be excessive or overstated; or

(b) Appraisal policies and practices may not conform with generally accepted professional standards.

(2) In lieu of causing such appraisals to be made, the director may accept an appraisal caused to be made by a Federal Home Loan Bank, the Federal [Home Loan Bank] Housing Finance Board or by the Federal [Savings and Loan] Deposit Insurance Corporation or other insuring agency of an insured association.

(3) Unless otherwise ordered by the director, appraisal of property pursuant to this section shall be made by an appraiser selected by the director. The cost of such appraisal shall be paid promptly by the association directly to the appraiser upon receipt by the association of a statement of the cost approved by the director. The director shall furnish a copy of the report of an appraisal made pursuant to this section to the association forthwith but no later than 60 days following the completion of the appraisal and may furnish a copy to the insuring agency.

SECTION 10. ORS 295.025 is amended to read:

295.025. (1) Any public official may retain undeposited such reasonable cash working fund as is fixed by the governing body of the political subdivision or public corporation for which the public official acts. Except to the extent of such cash working fund, each public official shall deposit public funds in the custody or control of the public official in one or more depositories currently qualified pursuant to ORS 295.005, 295.015 and 295.025 to 295.165. The public official shall not have on deposit in any one depository bank and its branches a sum in excess of the amount insured by the Federal Deposit Insurance Corporation [or the Federal Savings and Loan Insurance Corporation,] without procuring certificates of participation issued by the pool manager of the depository in an amount equal to the excess deposit. Compliance with ORS 295.005, 295.015 and 295.025 to 295.165 relieves the public official of personal liability on account of the loss of the public funds in the custody or control of the public official.

(2) Whenever a public official holds a certificate of participation issued by a pool manager in an amount exceeding the amount required by subsection (1) of this section, upon the written request of the depository bank the public official shall surrender it to the pool manager or direct the pool manager in writing to cancel it in whole or in a designated part.

SECTION 11. ORS 696.527 is amended to read:

696.527. (1) Any escrow agent may satisfy the requirements of ORS 696.525 by depositing with the State Treasurer, in an amount equal to the surety bond required, a deposit consisting only of the following:

(a) Cash;

(b) Ample secured obligations of the United States, a state or a political subdivision thereof;

(c) Certificates of deposit or other investments described in ORS 733.650 (4), to the extent that such investments are insured by the Federal Deposit Insurance Corporation [or the Federal Savings and Loan Insurance Corporation]; or

(d) Any combination of paragraphs (a), (b) or (c) of this subsection.

(2) The deposit shall be accepted and held by the State Treasurer for the faithful performance of escrow activity by the escrow agent. No claimant or judgment creditor or the escrow agent shall have the right to attach or levy upon any of the assets or securities held on deposit.

(3) The Real Estate Commissioner, by order, shall have discretion to authorize the State Treasurer to use such deposit, as follows:

(a) To satisfy any final judgment entered against the escrow agent for actual damages suffered by any person by reason of the violation of any of the provisions of ORS 696.505 to 696.590, now or hereafter enacted, or by reason of any fraud, dishonesty, misrepresentation or concealment of material fact growing out of any escrow transaction;

(b) For use in the liquidation of the escrow agent under the provisions of ORS 696.555;

(c) To release any or all of such deposit to the escrow agent when, in the opinion of the commissioner, such deposit is no longer necessary to protect the public; or

(d) Pursuant to ORS 183.413 to 183.497 the commissioner may determine that a violation of ORS 696.505 to 696.590 has been committed and direct the payment of a claim from the bond required under ORS 696.525 or substitute therefor required under this section provided the following conditions have been met:

(A) The amount of actual damages claimed, excluding attorney fees, by the consumer is $1,500 or less.

(B) The consumer has first contacted the escrow agent involved and, in writing, has made demand for payment of actual damages.

(D) The claim is only for actual damages sustained by the consumer.

(4) The commissioner shall waive the requirement of the surety bond or deposit for any escrow agent who demonstrates to the commissioner's satisfaction that the capital and surplus or net worth, of such escrow agent as of the end of the previous business accounting year of the agent is equal to, or greater than, the average month-end balance of custodial funds held by such agent during the previous business accounting year.

(5) All other claims against the bond or deposit of an escrow agent must be paid by the commissioner only upon the receipt of a final court judgment against the escrow agent and only in the amount of actual damages as ordered by the court.

SECTION 12. ORS 696.606 is amended to read:

696.606. (1) In accordance with any applicable provisions of ORS 183.310 to 183.550, the Real Estate Commissioner shall establish by rule a system to license real estate marketing organizations. Such a system shall include but need not be limited to prescribing:

(a) The form and content of and the times and procedures for submitting an application for the issuance or renewal of a license.

(b) The term of the license and the fee for the original issue and renewal in an amount that does not exceed the cost of administering the licensing system.

(c) The requirements and procedures to register the names of and other information regarding the real estate marketing employees employed by applicants or licensees.

(d) Those actions or circumstances that constitute failure to achieve or maintain licensing or competency or that otherwise constitute a danger to the public interest and for which the commissioner may refuse to issue or renew or may suspend or revoke a license or registration or may impose a penalty.

(e) Those activities of principals of the organization that constitute a danger to the public interest and for which the commissioner may refuse to issue or renew or may suspend or revoke a registration or may impose a penalty. For purposes of this section, "principal" means a person who has permitted or directed another to act for the person's benefit with respect to a real estate marketing organization.

(2) Licenses for real estate marketing organizations shall be granted only if the principal persons of the organization are trustworthy and competent to conduct real estate marketing activity in such manner as to safeguard the interests of the public and only after satisfactory proof has been presented to the commissioner. As used in this subsection, "satisfactory proof" includes but is not limited to the fingerprints and criminal offender information of the applicant.

(3) At the time of filing an application for a license as a real estate marketing organization, the applicant shall deposit with the commissioner a corporate surety bond running to the State of Oregon, executed by a surety company satisfactory to the commissioner, in the amount of $35,000 in a form and under terms and conditions established by the commissioner.

(4) Any real estate marketing organization may satisfy the requirements of subsection (3) of this section by depositing with the commissioner, in an amount equal to the surety bond required, a deposit consisting of any of the following:

(a) Cash;

(b) Ample secured obligations of the United States, a state or a political subdivision thereof;

(c) Certificates of deposit or other investments described in ORS 733.650 (4) to the extent that such investments are insured by the Federal Deposit Insurance Corporation [or the Federal Savings and Loan Insurance Corporation]; or

(d) Any combination of paragraphs (a), (b) and (c) of this subsection.

(5) Any real estate marketing organization making a deposit with the commissioner shall assign in trust, to the Real Estate Commissioner, and the commissioner's successors in office, all cash certificates or securities deposited in accordance with this section.

(6) The deposit shall be accepted and held by the commissioner for the faithful performance of real estate marketing activity by the real estate marketing organization. No claimant or judgment creditor of the real estate marketing organization shall have the right to attach or levy upon any of the assets or securities held on deposit.

(7) The commissioner, by order, may use such deposit under subsection (3) or (4) of this section, as follows:

(a) To satisfy any final judgment entered against the real estate marketing organization for actual damages suffered by any person by reason of the violation of ORS 696.603, 696.606 or 696.612 or a rule adopted pursuant thereto, or by reason of any fraud, dishonesty, misrepresentation or concealment of material fact growing out of any real estate marketing activity.

(b) To satisfy an order of the commissioner if the commissioner determines that a violation of ORS 696.603, 696.606 or 696.612 or a rule adopted pursuant thereto has occurred and directs the payment of a claim from the deposit provided the following conditions have been met:

(A) The amount of actual damages claimed, excluding attorney fees, by the consumer is $1,000 or less.

(B) The consumer has first contacted the real estate marketing organization involved and, in writing, has made demand for payment of actual damages.

(C) The real estate marketing organization has had 30 calendar days from the date of the consumer's written demand to deal with the demand.

(D) The claim is only for actual damages sustained by the consumer.

(8) All claims against the deposit under subsection (3) or (4) of this section of a real estate marketing organization, other than those described in subsection (7) of this section, must be paid by the commissioner only upon the receipt of a final court judgment against the real estate marketing organization and only in the amount of actual damages as ordered by the court.

SECTION 13. ORS 722.048 is amended to read:

722.048. (1) A savings association shall obtain and maintain insurance of its savings accounts from the Federal [Savings and Loan] Deposit Insurance Corporation or other federal or state agency, or from another insurer approved by the Director of the Department of Consumer and Business Services.

(2) Upon receiving an application from an association for approval of an insurer, the director shall give reasonable notice to the insurer and the applicant and conduct a public hearing on the application. The director may issue a certificate approving an insurer if the director determines that the contract of insurance contemplated:

(a) Is written upon substantially the same basis as to form, amount, coverage, maturity, voluntary and involuntary termination and other provisions as the insurance contract provided by the Federal [Savings and Loan] Deposit Insurance Corporation;

(b) Complies with any further requirements for protection of account holders that the director considers reasonably necessary; and

(c) Is underwritten by an insurer who has a net worth reasonably commensurate with the risks underwritten and is authorized to transact insurance in this state.

(3) Subsection (2) of this section applies to all revisions or modifications of such contracts of insurance.

(4) Insured associations may make representations as to insurance of savings accounts but all representations shall set forth the name of the insurer. An association or other person shall not advertise, represent, accept or offer to accept any savings accounts in this state, unless the accounts are insured as provided by this section.

SECTION 14. ORS 722.202 is amended to read:

722.202. A savings association has all the powers conferred by this chapter, or its charter or certificate of incorporation, both express and implied, and such other rights, privileges and powers as are incidental thereto or reasonably necessary or appropriate to the accomplishment of the purpose of the association. Among other rights, privileges and powers, and except as otherwise limited by the provisions of this chapter, a savings association may:

(1) Procure insurance of its real estate and other loans and of its savings accounts from any federal, state or private agency or corporation authorized to write such insurance and, in the exercise of such powers, may comply with any requirements of law or rule or order promulgated and execute any contracts and pay any premiums required in connection therewith.

(2) Be a member of a Federal Home Loan Bank, the Federal [Savings and Loan] Deposit Insurance Corporation or any similar federal or state agency, and do all things required by federal or state law to obtain and continue such membership.

(3) Acquire savings and pay earnings thereon, and lend and invest its funds.

(4) Subject to compliance with the reserve requirements for demand deposits, receive demand deposits any time after the earliest of one of the following dates:

(a) When federal regulatory authorities eliminate the interest rate differentials between bank time accounts and federal association time accounts.

(b) When federal legislation is enacted permitting charters for federal associations to include demand deposit authority.

(5) Subject to regulations of the United States Treasury Department, serve as depositories for federal taxes or as treasury tax and loan depositories, and satisfy any requirements in connection therewith including establishing tax and loan accounts and note accounts (which are not classified as savings accounts or savings deposits), which are subject to the right of immediate withdrawal or call, and may require pledging collateral.

(6) Participate in future and option transactions through regulated or recognized markets, subject to rules prescribed by the Director of the Department of Consumer and Business Services.

SECTION 15. ORS 722.352 is amended to read:

722.352. (1) A savings association may participate with another lender or lenders in making loans of any type that an association may otherwise make, if the other lender or each of the other lenders is:

(a) An instrumentality or agency of the United States or this state;

(b) Insured by the [Federal Savings and Loan Insurance Corporation or by the] Federal Deposit Insurance Corporation;

(d) A Federal Housing Administration approved mortgagee; or

(e) Another lender approved by the Director of the Department of Consumer and Business Services.

(2) Without regard to any term or loan-to-security limitation provided by ORS 722.302 to 722.356, a savings association may make, buy and sell any loan, secured or unsecured, if the loan is insured or guaranteed. A loan shall be considered insured or guaranteed if:

(a) It is insured or guaranteed in any manner in part or in full by the United States or this state, or an instrumentality thereof; or

(b) A commitment so to insure or guarantee or a conditional guarantee has been issued.

(3) A savings association may buy, sell or participate in the purchase or sale, with or without servicing, of all or a portion of any loan or of a pool of loans which may be evidenced by a participation certificate, mortgage-backed bond or note, or mortgage pass-through certificate. The loans must be of a type eligible for origination and investment under this chapter. If the association is a buyer, the originator and services must qualify under subsection (1) of this section.

SECTION 16. ORS 722.504 is amended to read:

722.504. A foreign association may apply to the Director of the Department of Consumer and Business Services for a certificate of authority to transact business in this state. With such application it also shall pay the proper filing fee and file:

(1) A copy of its articles of incorporation and bylaws certified as a true copy by the public officer or association officer having custody of the original articles or bylaws;

(2) Evidence satisfactory to the director that its savings accounts are insured by the Federal [Savings and Loan] Deposit Insurance Corporation or other insurer as required by ORS 722.048;

(3) A designation of the community in which the principal office within this state shall be located; and

(4) Other information the director may require.

SECTION 17. ORS 733.654 is amended to read:

733.654. An insurer shall not invest the funds of a separate account so as to have more than 10 percent of the market value of the assets of the account invested in or secured by the stocks, obligations or property of any one person or political subdivision, or invested in a single parcel of real property or any other single investment. This section does not apply to:

(1) Funds equaling 25 percent of the market value of the total assets in the separate account;

(2) Investments in, or loans upon, the security of the general obligations of a sovereign; or

(3) Investments in certificates of deposits insured by the Federal Deposit Insurance Corporation [or the Federal Savings and Loan Insurance Corporation].

SECTION 18. ORS 750.685 is amended to read:

750.685. (1) Except as otherwise provided in this section, no legal expense plan shall be issued, sold or offered for sale in this state unless the organization offering the plan is insured under an insurance contract that provides indemnification for the services under the plan, or reimbursement for services performed under a service contract, in the event of default of the organization. Any such insurance shall be issued only by an insurer authorized to do business in this state.

(2) Instead of holding insurance under subsection (1) of this section, an organization offering an access plan described in subsection (5) of this section may post a bond or provide evidence of deposit pursuant to this subsection. The bond or other deposit is to be held in trust to the Director of the Department of Consumer and Business Services for the protection of members of the plan and other affected persons. The initial security bond or other deposit required for an access plan for at least the first full year of operation shall be in the amount of $10,000. The amount of deposit shall be adjusted annually and shall be in an amount equal to 10 percent of the gross written prepaid fees collected from plan members in the preceding calendar year, to a maximum of $50,000. The bond or other deposit is to be held in a bank authorized to do business in this state and insured by the Federal Deposit Insurance Corporation or in a savings and loan association insured by the Federal [Savings and Loan] Deposit Insurance Corporation.

(3) Instead of holding insurance under subsection (1) of this section, an organization offering a comprehensive plan described in subsection (5) of this section may post a bond or provide evidence of deposit pursuant to this subsection. The bond or other deposit is to be held in trust to the director for the protection of members of the plan and other affected persons. The initial security bond or other deposit required for a comprehensive plan for at least the first full year of operation shall be in the amount of $25,000. The amount of deposit shall be adjusted annually and shall be in an amount equal to 10 percent of the gross written prepaid fees collected from plan members in the preceding calendar year, to a maximum of $100,000. The bond or other deposit is to be held in a bank authorized to do business in this state and insured by the Federal Deposit Insurance Corporation or in a savings and loan association insured by the Federal [Savings and Loan] Deposit Insurance Corporation.

(4) Property used as security shall be held in trust and shall remain unencumbered, and shall have at all times a market value of at least 95 percent of the amount specified. Any bond issued in lieu of security shall be cancelable only upon 30 days' advance written notice filed with the director. Securities or bonds deposited pursuant to this section shall be for the benefit of and subject to action thereon in the event of insolvency of the plan by any person sustaining actionable injury due to failure of the organization to faithfully perform its obligations to its members.

(5) For purposes of this section:

(a) "Access plan" means a plan that provides legal advice or consultation on legal matters that can be reasonably handled over the phone or by a limited review of routine legal documents.

(b) "Comprehensive plan" means a plan that provides legal advice and consultation regarding more complex or time-consuming matters and may include advice and representation in and regarding administrative and civil or criminal judicial proceedings.

SECTION 19. A financial institution that is operating a loan production office in this state on the effective date of this 1999 Act shall file the notice and fee required under section 5 of this 1999 Act not later than 180 days after the effective date of this 1999 Act.

SECTION 20. (1) The amendments to ORS 706.720 by section 2 of this 1999 Act apply to records of the Department of Consumer and Business Services in existence prior to, on or after the effective date of this 1999 Act.

(2) The amendments to ORS 709.005 by section 3 of this 1999 Act apply to applications for authority to transact trust business made on or after the effective date of this 1999 Act.

Approved by the Governor April 23, 1999

Filed in the office of Secretary of State April 23, 1999

Effective date October 23, 1999

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