from such a corporation and to agree to make periodic payments to the corporation in amounts which together with other income of the corporation will be sufficient to pay the principal of and interest on the bonds of the corporation. The law also authorizes a city to provide for the levying of a tax to make such payments.

(2) The Corporation has entered into a contract with the City of Houston under which the Corporation will finance and construct a water and sewer system for a suburban area immediately adjacent to the City and the City will annex the area and purchase the system. Construction of the project will be assisted by a federal grant of $1 million. The Corporation is issuing these bonds to finance the remaining costs.

(3) In the purchase contract the City has unconditionally promised to make periodic payments to the corporation in amounts which will be sufficient to pay the principal of and interest on these bonds. The contract also provides that the periodic payments shall be payable from a continuing, direct annual ad valorem tax on all taxable property in the City sufficient to make such payments in each year and the City has by ordinance levied such a tax. The City which possesses general powers of taxation has thus committed its faith and credit in support of the bonds.

(c) Ruling. It is our conclusion, therefore, that the $2,200,000 Water and Sewer Improvement Bonds, Series 1967, of the Northwest Houston Water Supply Corp. are general obligations of a State or a political subdivision thereof under paragraph Seventh of 12 U.S.C. 24 and, accordingly, are eligible for purchase, dealing in, underwriting and unlimited holding by national banks.

[32 F.R. 17926, Dec. 15, 1967]

§ 1.204 Wisconsin University Building Corporation and the Wisconsin State Agencies Building Corporation.

(a) Request. The Comptroller of the Currency has been requested to consider whether the rulings of September 25, 1964, that bonds of the Wisconsin University Building Corporation and the Wisconsin State Agencies Building Corporation are public securities and therefore eligible for purchase, dealing in, underwriting, and unlimited holding by national banks (§§ 1.150 and 1.151) are now applicable with respect to outstand

ing and future bond issues of the two corporations.

(b) Opinion. (1) The State of Wisconsin has authorized The Regents of the University of Wisconsin, The Board of Regents of State Colleges and the Department of Public Welfare to enter into long-term lease rental agreements with a nonprofit corporation for the construction and financing of buildings and other improvements related to activities under their control.

(2) The Wisconsin University Building Corporation is a nonprofit corporation organized under the provisions of the Wisconsin Nonstock Corporation law for the purpose of acquiring, financing and improving real estate and leasing such improved real estate to the University of Wisconsin. The Wisconsin State Agencies Building Corporation is also a nonprofit corporation organized under the provisions of the same law for the purpose of constructing buildings and other improvements for University, State college, and general State purposes.

(3) The proceeds of the bonds issued and to be issued by these corporations are for the construction of facilities to be leased to the University, the State colleges or the Department of Public Welfare, respectively, on long-term leases. Rental payments under the leases are in an amount determined to be sufficient to pay the principal of and interest on the bonds issued in connection with the project. While funds from various sources are available for the payment of the lease rentals the law specifically provides that the State shall be liable and may be sued on contract for accrued rentals and for any other default under any such lease.

(4) The State of Wisconsin, which possesses general powers of taxation, has thus pledged its full faith and credit to make payments to the corporations of amounts sufficient to provide for all required payments in connection with these bonds.

(c) Ruling. It is our conclusion, therefore, that bonds of the Wisconsin University Building Corporation and the Wisconsin State Agencies Building Corporation are general obligations of the State of Wisconsin under paragraph Seventh of 12 U.S.C. 24 and, accordingly, are eligible for purchase, dealing in, underwriting, and unlimited holding by national banks.

[32 F.R. 20945, Dec. 29, 1967]

plied with by national bank desiring to act as insurance agents. 2.2 Regulations for national banks which many undertake to act as agents for insurance companies. 2.3 Statutory requirements to be compiled with by national bank desiring to act as broker or agent in making or procuring loans on real estate.

2.4 Regulations for national bank acting as broker or agent in making or procuring loans on real estate.

2.5 Application forms to be executed by applicants when national bank acts as broker for the placing of loans. AUTHORITY: The provisions of this Part 2 issued under sec. 13, 39 Stat. 753; 12 U.S.C. 82, 347.

SOURCE: The provisions of this Part 2 contained in Regulations, Dec. 1, 1916, unless otherwise noted.

§ 2.1 Statutory requirements to be complied with by national bank desiring to act as insurance agent.

(a) The bank must be located in a place the population of which does not exceed 5,000 as shown by the last preceding decennial census.

(b) The insurance company for which the bank acts as agent must have been authorized by the authorities of the State in which the bank is located to do business in that State.

(c) The activities of the bank as such agent must be restricted to the soliciting and selling of insurance and the collection of premiums on policies issued by the insurance company.

(d) The bank may receive for services so rendered such lawful fees or commissions as may be agreed upon between the bank and the insurance company for which it may act as agent.

(e) The bank is prohibited from assuming or guaranteeing the payment of any premium on insurance policies issued, through its agency, by its principal.

(f) The bank is prohibited from guaranteeing the truth of any statement made by an assured in filing his application for insurance.

dent (or vice president) and cashier, a copy of which is on file in this bank, is hereby ratified and approved.

(b) A certified copy of such resolution, attested by the president or vice president and by the cashier and by a majority of the directors of the bank, must be forwarded to this office on forms to be furnished by this office.

(c) There should be on file in the bank, available for inspection by the Examiner, the following documents:

(1) An authoritative statement showing the population of the town according to the last preceding decennial census.

(2) A proper certificate from the authorities of the State in which the bank is located showing as to each insurance company for which the bank is acting as agent that such company has received authority from the said State to transact business in that State.

(3) A proper certificate or other writing of each insurance company for which the bank acts, authorizing the bank to act as its agent, setting forth that the bank does not guarantee the payment of any premium on insurance policies issued through its agency by its principal, and stating that the bank is not to be held responsible for the truth of any statement made by an assured in filing his application for insurance.

(4) Copies of all reports for the previous five years made by the agent bank to each insurance company which it represents.

(d) The bank will be required to keep a record as to each company for which it acts as agent, showing: For fire in

surance: The amount of each policy, the rate and premium, date of commencement, term, and date of expiration, as well as a description of property insured, with name of assured and to whom loss is payable. As to life insurance: Amount and date of policy, with premium, and a statement as to under what form the insurance is written, giving also name of assured and beneficiary. As to any and all other forms of insurance: The fullest possible particulars as to amounts, dates, rate, premiums, and what is insured by the policy, and of collection of all premiums collected for account of the company, refunds made, the proportion of premium credited to the profits of the bank under its agreement with the company, the proportion due the company, the amounts and dates of all remittances made to the insurance company on account of premiums collected, and the balance, if any, due from the bank to the insurance company.

(e) The bank will be required to carry on its general ledger an account which will, at all times, show the amount due to insurance companies for which it is acting as agent, on account of premiums collected but not remitted, and this liability must be shown in reports of condition and in the published statements of the bank under the heading "other liabilities-on account of insurance premiums collected and not remitted," unless specifically provided for in the report.

(f) The bank should also keep such records as may be required by each insurance company in the manner and under the forms prescribed by the various companies; all of which should be available for inspection by the Examiner on request.

(g) The agent bank must not assume any responsibility or liability for either the adjustment, settlement, or payment of losses under any policy issued by or through its agency.

(h) The records of all profits derived from the insurance agency should be carried in a separate account on the books of the bank, and the records should be so kept as to enable the Examiner readily to trace to the source all items of profit derived in this connection. [Regs., Dec. 1, 1916, as amended at 22 F.R. 10075, Dec. 17, 1957]

§ 2.3 Statutory requirements to be complied with by national bank desiring to act as broker or agent in making or procuring loans on real estate. (a) The bank must be located in a place the population of which does not exceed 5,000 as shown by the last preceding decennial census.

(b) The real estate by which the loans negotiated are secured must be located within 100 miles of the place in which the negotiating bank is located.

(c) The bank may receive for such services a reasonable fee or commission. (d) The bank shall in no case guarantee either the principal or interest of any such loans.

(e) The powers conferred are to be exercised under such regulations as may be prescribed by the Comptroller of the Currency.

§ 2.4 Regulations for national bank acting as broker or agent in making or procuring loans on real estate.

(a) A bank intending to avail itself of this provision of the law must adopt by its board of directors a resolution in the following form:

Be is resolved, That the officers of the
National Bank of

are hereby authorized and empowered on behalf of this bank, as broker or agent, to accept from customers of this bank deposits of funds to be invested for account of said customers, in loans secured by real estate, and to procure, as broker or agent, for customers of this bank loans which shall be secured by real estate, under the provisions of the act approved September 7, 1916; Provided, That the investment of such funds as stated, and all such procuring of loans or lending of funds for clients shall be undertaken only under written instructions from the customer for whom this bank, through its officers, may act as broker or agent, such written instructions in each case to be first delivered to an officer of this bank. Such instructions shall, in all cases, state clearly that the bank in acting as broker or agent in no way guarantees payment of either the principal or interest of any loan so negotiated.

(b) A certified copy of such resolution, attested by the president or vice president and cashier and by a majority of the directors of the bank, must be forwarded to this office, on forms to be furnished by this office.

(c) No bank shall charge more than one commission or brokerage on the

making of any loan; that is to say, if it shall charge a brokerage or commission to the party borrowing the money, it shall not charge a brokerage or commission to the party to whom money is so loaned, and vice versa.

(d) Each bank acting under this provision of law will be required to keep for a period of five years a record showing as to each loan negotiated by the bank: (1) The name and address of the principal for whom the bank is acting, (2) Date of written instructions from the principal,

(3) Name and address of maker of note,

(4) Date of note,

(5) Date of maturity of note,

(6) Brief description of property securing note, showing location and distance from place in which bank is located,

(7) Character of improvements, etc., (8) Name and address of party to whom note was transferred or delivered by the bank,

(9) Date of such transfer or delivery, (10) Amount of principal of note, (11) Rate of interest or discount, (12) Rate of commission or brokerage charged by bank for acting as broker or agent, and

(13) Amount of such commission or brokerage, and whether said commission was paid by borrower of the money or by the party for whom it was loaned.

(e) A book should be kept showing the date on which each mortgage or deed of trust negotiated by the bank has been admitted to record, the court in which the same is recorded, and the recordation fees paid in each case.

(f) The records of all profits derived from acting as broker or agent in negotiating loans on real estate should be carried in a separate account on the books of the bank, and the records should be so kept as to enable the Examiner readily to trace to the source all items of profit derived in this connection.

(g) Deposits of money received by the bank as broker or agent to be invested in loans secured by real estate as prescribed by law, must be treated as trust funds and kept separate and apart from the other assets of the bank. Such funds must in no case be permitted to pass from the possession of the bank until the loan for which they are to be paid out is formally accepted by or in behalf of the party for whose account negotiated.

(h) No bank shall advance or use its own funds in connection with real estate loans negotiated as broker or agent.

(i) No loans secured by real estate, which the bank has negotiated as broker or agent, should become a part of the assets of the bank even temporarily, unless such loans conform to the provisions of section 24 of the Federal Reserve Act (38 Stat. 273; 12 U.S.C. 371) as amended.

(j) There should be available in the bank for inspection by the National Bank Examiner:

(1) An authoritative statement showing the population of the town according to the last preceding decennial cen

sus.

(2) All records pertaining to the negotiation of real estate loans as broker or agent.

[Reg., Dec. 1, 1916, as amended at 22 F.R. 10075, Dec. 17, 1957]

§ 2.5

Application forms to be executed by applicants when national bank acts as broker for the placing of loans.

(a) These applications should show: (1) Location of property.

(2) Acreage.

(3) Assessed valuation.

(4) Estimated present value.

(5) Brief descriptions of buildings thereon, and estimated value of them.

(6) Whether buildings are insured, and, if so, for what amounts and in what companies.

(7) Whether property is already encumbered, and, if so, for what amount.

(8) If property is farm property applicant should state whether or not the dwelling is provided with sanitary arrangements approved by the local board of health, and, if not, what sanitary arrangements there are.

(b) At the foot of this application should be printed below the signature of the applicant a statement to the effect that "The statements in the foregoing application have been submitted to this bank by the applicant for the loan, but this bank does not undertake to guarantee the correctness of any of the statements made by the applicant."

(c) If any applicant for a loan makes statements in his application which any officers of the bank before whom the application may come may have reason to think are not correct, the attention of the applicant should be called to the possible discrepancy.