LEGISLATIVE UPDATE

TO: CEOs, Presidents & Legislative Contacts

FROM: Charles M. Miller, SVP / Director of Legislation & Regulation

DATE: February 13, 2009

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This week the pace picked up for the ABA at the Capitol as we added several bills and resolutions to our tracking list. Although nothing that would have disastrous consequences to the industry has been introduced, we continue to offer suggestions and amendments to legislation that would be harmful if not addressed.

On Thursday we met with the Department of Finance and Administration (DF&A) to further discuss legislation that deals with the forged lien release case out of Washington County. They are most willing to work with us to craft policy/legislation that will prevent this situation from happening again. DF&A is currently researching how many times a person simultaneously presents a lien release and request for duplicate title. This information will help us to determine the best remedy.

HB 1037 by Dawn Creekmore, D-Hensley is the security freeze bill that opens these freezes up to any consumer, not just ID theft victims. Several amendments have been adopted and the Attorney General does not oppose these changes. Based on these amendments and the fact that most states and the credit bureaus allow security freezes by all consumers, we have a neutral position. The bill received a do pass recommendation by the House Insurance and Commerce Committee today.

HB 1204, the Governor’s tobacco tax proposal to fund health care programs, has now passed both the Senate and House and is on his desk to be signed. We have a neutral position on HB 1204. However, the ABA remains opposed to HB 1238 which would fund some of the same programs with insurance premium taxes. This bill is still in the House Committee on Public Health, Welfare & Labor.

Rep. Tim Summers, R-Bentonville filed House Bill 1392 last week. His legislation would insure that purchase money liens have priority over any fees assessed by an improvement district. The ABA is most supportive of HB 1392 and will work for its passage.

Another bill that we are supporting was introduced this week. HB 1410 clarifies that Mortgage Lien Protection Insurance, also known as a Lenders Performance Bond, is not title insurance. Rep. John Hoyt, D-Morrilton introduced this bill to codify a policy by the former Insurance Commissioner which stated that this product should be regulated as casualty insurance rather than title insurance. Many lenders use this product on second mortgages because they believe that it is safe, faster and good for the customer.

House Bill 1433 was also introduced this week by fellow banker Rep. Bruce Maloch, D-Magnolia. His bill is proposed by Bank Commissioner Franks and supported by this Association. The legislation authorized the commissioner to react as necessary regarding bank operations when an emergency has been declared.

During the past couple of weeks I have had several good and open discussions with our Bank Commissioner and the new Insurance Commissioner, Jay Bradford, and gotten to know the new Securities Commissioner, Heath Abshure. It is always important to remember that these regulators are a very important part of the process and when the Legislature goes home they remain on duty every day of the week.

Please let me know if you have any questions about the legislation we are tracking or hear of something your Association should be on the lookout for.