Pre-filed December 20, 1995, and 1,000 copies ordered printed.

Read 2nd time January 8, 1996, and referred to the Committee on Financial and Governmental Operations.

Reported from the Committee February 12, 1996, with recommendation that the bill do pass with Senate Committee Amendment No. 1 and be placed on the Consent Calendar.

Senate Committee Amendment No. 1 adopted February 21, 1996.

Taken up February 28, 1996. Read 3rd time and placed upon its final passage; bill passed.

TERRY L. SPIELER, Secretary.

S2040.02P

To repeal sections 442.605, 442.610, and 442.615, RSMo 1994, relating to real estate settlement agents, and to enact in lieu thereof two new sections relating to the same subject, with penalty provisions.

Be it enacted by the General Assembly of the State of Missouri, as follows:

Section A. Sections 442.605, 442.610, and 442.615, RSMo 1994, are repealed and two new sections enacted in lieu thereof, to be known as sections 381.410 and 381.412, to read as follows:

381.410. As used in sections 381.410 and 381.412, the following terms mean:

(1) Cashier's check", a check, however labeled, drawn on the financial institution, which is signed only by an officer or employee of such institution, is a direct obligation of such institution, and is provided to a customer of such institution or acquired from such institution for remittance purposes;

(2) Certified funds", U.S. currency, funds conveyed by a cashier's check, certified check, teller's check, as defined in Federal Reserve Regulations CC, or wire transfers, including written advice from a financial institution that collected funds have been credited to the settlement agent's account;

(3) Director", the director of the department of

insurance, unless the settlement agent's primary regulator is another division in the department of economic development. When the settlement agent is regulated by such division, that division shall have jurisdiction over sections 381.410 and 381.412;

(4) "Financial institution":

(a) A person or entity doing business under the laws of this state or the United States relating to banks, trust companies, savings and loan associations, credit unions, commercial and consumer finance companies, industrial loan companies, insurance companies, small business investment corporations licensed pursuant to the Small Business Investment Act of 1958 (15 U.S.C. Section 661, et seq.), as amended, or real estate investment trusts as defined in 26 U.S.C. Section 856, as amended, or institutions constituting the Farm Credit System pursuant to the Farm Credit Act of 1971 (12 U.S.C. Section 2000, et seq.), as amended, or any person which services loans secured by liens or mortgages on real property, which person may or may not maintain a servicing portfolio for such loans; or

(b) The following persons or entities if their principal place of business is in Missouri or a state which is contiguous to Missouri:

a. A mortgage loan company which is subject to licensing, supervision or auditing by the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation, or the United States Veterans Administration, or the Government National Mortgage Association, or the United States Department of Housing and Urban Development, or a successor of any of the foregoing agencies or entities, as an approved seller or servicer; or

b. A person or entity acting as a mortgage loan company pursuant to court order;

(5) Settlement agent", a person, corporation, partnership, or other business organization which accepts funds and documents as fiduciary for the buyer, seller or lender for the purposes of closing a sale of an interest in real estate located within the state of Missouri, and is not a financial institution, or a member in good standing of the Missouri Bar Association, or a person licensed under chapter 339, RSMo.

381.412. 1. Except as otherwise provided in this section, a settlement agent who accepts funds of more than ten thousand dollars, but less than one million dollars, for closing a sale of an interest in real estate shall require a buyer, seller or lender who is not a financial institution to convey such funds to the settlement agent as certified funds. The settlement agent shall record all security instruments for such real estate closing within three business days of such closing after receipt of such certified funds. A check:

(1) Drawn on an escrow account of a licensed real estate broker, as regulated and described in section 339.105, RSMo;

(2) Drawn on an escrow account of a title insurer or title insurance agency licensed to do business in Missouri; or

(3) Drawn on an agency of the United States of America, the state of Missouri or any county or municipality of the state of Missouri;

shall be exempt from the provisions of this section. In addition, any fees paid to a federal agency, payments for premiums for private mortgage insurance, and payments to satisfy an existing deed of trust shall be exempt from the provisions of this section.

2. No title insurer, title insurance agency or title insurance agent, as defined in section 381.031, shall make any payment, disbursement or withdrawal in excess of ten thousand dollars from an escrow account which it maintains as a depository of funds received from the public for the settlement of real estate transactions unless a corresponding deposit of funds was made to the escrow account for the benefit of the payee or payees at least ten days prior to such payment, disbursement or withdrawal, or where such corresponding deposit of funds consisted of certified funds.

3. If the director finds that a settlement agent has violated any provisions of this section, the director may assess a fine of not more than two thousand dollars for each violation, plus the costs of the investigation. Each separate transaction where certified funds are required shall constitute a separate violation. In determining a fine, the director shall consider the extent to which the violation was a knowing and willful violation, the corrective action taken by the settlement agent to ensure that the violation will not be repeated, and the record of the settlement agent in complying with the provisions of this section.

[442.605. As used in sections 442.605 to 442.615, the following terms mean:

(1) Cashier's check", a check, however labeled, drawn on the financial institution, which is signed only by an officer or employee of such institution, is a direct obligation of such institution, and is provided to a customer of such institution or acquired from such institution for remittance purposes;

(2) Certified funds", U. S. currency, funds conveyed by a cashier's check, teller's check, as defined in Federal Reserve Regulations CC, written advice from a financial institution that collected funds, including wire transfers, have been credited to the settlement agent's account, and a hold has been placed on such account for the benefit of the settlement agent, or other special draft on a financial institution, provided that under current law, such institution's duty to pay on such draft may not be terminated, suspended or modified for the amount of the draft should such institution honor the remitter's request for stop payment on such draft;

(3) Director", the director of the department of insurance, unless the settlement agent's primary regulator is another division in the department of economic development. When the settlement agent is regulated by such division, that division shall have jurisdiction over sections 442.605 to 442.615;

(4) Financial institution", a person or entity as defined in subdivision (1), (4) or (5) of section 443.705, RSMo;

(5) Remitter", a person, corporation, partnership, or other business organization, or other entity of any kind, which purchases a draft from a financial institution to convey funds to itself or other parties;

(6) Settlement agent", a person, corporation, partnership, or other business organization which accepts funds and documents as fiduciary for the buyer, seller or lender for the purposes of closing a sale of an interest in real estate located within the state of Missouri, and is not a financial institution, or a member in good standing of the Missouri Bar Association, or a person licensed under chapter 339, RSMo.]

[442.610. A settlement agent who accepts funds of more than ten thousand dollars, but less than one million dollars, for closing a sale of an interest in real estate shall require a buyer, seller or lender who is not a financial institution to convey such funds to the settlement agent as certified funds. The settlement agent shall record all security instruments for such real estate closing within three business days of such closing after receipt of such certified funds. A check drawn on an escrow account of a licensed real estate broker, as regulated and described in section 339.105, RSMo, shall be exempt from the provisions of this section. In addition, any fees paid to a federal agency, payments for premiums for private mortgage insurance, and payments to satisfy an existing deed of trust shall be exempt from the provisions of this section.]

[442.615. If the director finds that a settlement agent has violated any provisions of sections 442.605 to 442.615, the director may assess a fine of not more than two thousand dollars for each violation, plus the costs of the investigation. Each separate transaction where certified funds are required shall constitute a separate violation. In determining a fine, the director shall consider the extent to which the violation was a knowing and willful violation, the corrective action taken by the settlement agent to ensure that the violation will not be repeated, and the record of the settlement agent in complying with the provisions of sections 442.605 to 442.615.]