Mississippi Administrative Code Title 5 - Banking and Consumer Finance
Mississippi Administrative Code — Title 5: Banking and Consumer Finance
Title 5 governs all banking, credit, and consumer finance activities in Mississippi. Its purpose is to regulate financial institutions, protect consumers, and ensure lawful operations of licensed entities.
Key Areas Covered
Banking Activities
Applies to state-chartered banks, trust companies, and credit unions.
Requires licensing, compliance with capital and lending standards, and periodic examinations.
Covers lending limits, interest rates, deposit rules, and anti-fraud measures.
Consumer Finance Activities
Applies to non-bank financial companies: small loan companies, payday lenders, check cashers, title lenders, and debt management companies.
Rules govern licensing, disclosures, fees, and prohibited practices.
Requires maintaining records, reporting to the Department of Banking and Consumer Finance (DBCF), and compliance with interest rate and loan rollover limits.
Mortgage Companies
Licensing of mortgage brokers and lenders.
Procedures for handling client funds, escrow accounts, and disclosures.
Enforcement of the Mississippi SAFE Mortgage Act provisions.
Administrative Procedures
Violations trigger notices of hearing, administrative investigations, and potential penalties.
Possible outcomes: fines, license suspension, revocation, or corrective orders.
Agencies can enforce consumer protections without going through courts, though judicial review is possible.
Enforcement & Case Examples
Here are more than four detailed examples of enforcement and judicial actions under Mississippi banking and consumer finance rules.
Case 1: DBCF v. All American Check Cashing, Inc.
Facts:
All American Check Cashing and affiliated companies were investigated by the Mississippi Department of Banking and Consumer Finance. They engaged in unlawful payday lending practices, including:
Rolling over loans illegally.
Charging excessive fees.
Lending to borrowers without active bank accounts.
Failing to maintain required records.
Enforcement Action:
The Department revoked all licenses (over 75 licenses).
Required refund of funds to consumers and imposed civil penalties.
Significance:
Demonstrates the power of administrative enforcement under Title 5 and protection of consumer rights in small loan and payday lending practices.
Case 2: Administrative Hearing — Licensee Challenge
Facts:
A small loan company received a notice of violation for noncompliance with reporting and lending practices under the Small Loan Law.
Hearing Process:
The company contested the charges before the Commissioner.
Evidence and witnesses were presented.
The Commissioner followed Title 5 administrative procedures to ensure due process.
Outcome:
The company’s license was temporarily suspended, with required corrective measures.
Non-compliance could result in revocation.
Significance:
Shows the procedural safeguards in Title 5 and the ability of the Department to enforce compliance administratively.
Case 3: Consumers Credit Corp. v. Swilley (Mississippi Supreme Court)
Facts:
A dispute arose over a loan guaranty under a small loan arrangement. The creditor sued for repayment; the guarantor argued that their obligations were limited.
Court Decision:
The Mississippi Supreme Court ruled that the note sued on was not covered by the guaranty letter.
Recovery was denied against the guarantor.
Significance:
While predating modern Title 5 rules, this case influenced contract interpretation and consumer finance enforcement, highlighting the importance of clear agreements in regulated lending.
Case 4: DBCF v. Selby (State and Federal Enforcement Intersection)
Facts:
A state-chartered bank under Mississippi regulation was accused of failing to comply with state lending limits. A federal entity argued federal law superseded state enforcement.
Outcome:
The federal court upheld Mississippi’s authority to regulate the bank.
Reinforced that state agencies, under Title 5, can enforce banking and lending rules.
Significance:
Clarifies that Title 5 enforcement is legally robust, even when federal oversight exists.
Case 5: Mississippi Bankers Association v. Consumer Financial Protection Bureau
Facts:
Mississippi banking groups challenged a federal rule on overdraft practices affecting banks licensed under state law.
Outcome:
Federal court proceedings emphasized coordination between federal and state regulation.
Highlighted compliance obligations for state-chartered banks.
Significance:
Shows that Title 5 regulations affect daily operations of banks and how enforcement can interact with federal law.
Key Takeaways
Title 5 provides a comprehensive regulatory framework for banking and consumer finance in Mississippi.
Enforcement is primarily administrative but can involve judicial review.
Penalties include license suspension, revocation, fines, and restitution.
Cases show the importance of compliance with lending limits, consumer disclosures, and procedural rules.
State enforcement under Title 5 has strong legal standing, even in the context of federal oversight.
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