In addition to the amendments to the Mississippi S.A.F.E. Mortgage Act discussed elsewhere in this newsletter, several other changes to Mississippi law have recently become effective. A brief summary follows:
Formatting for recorded documents. Effective July 1, 2012, the formatting standards contained in Miss. Code §89-5-24 for documents to be recorded in the land records have been revised. The main changes are that the minimum font size is increased from 8 point to 10 point type, and the documents must include on the first page the name, physical mailing address and business or employment telephone number of the preparer and every other part)., to the instrument. In a deed of trust, that would include the grantors, trustee and beneficiary.
Statute of limitations. Effective July 1, 2012, Miss. Code §15-1-81 sets the statute of limitations for enforcing a non-negotiable promissory note at 6 years from the due date. If the note is payable on demand, an action to enforce the note must be brought within 6 years after demand. If no demand is made, enforcement is barred if no payments of principal or interest are made for a period of 10 years. A non-negotiable note is defined as an unconditional written undertaking to pay absolutely and in any event a fixed amount of money and that is not a negotiable instrument governed by UCC Article 3. The term includes non-negotiable notes that bear interest at a variable rate or provide for interest by reference to information not contained in the note itself, or that bear interest after default. Essentially, this change makes the limitation period for enforcing non-negotiable notes the same as for negotiable notes under the UCC. The change also means that the limitation period for enforcing a deed of trust securing a non-negotiable note is extended. Mississippi banks should, however, carefully consider the definition of non-negotiable note before relying on this change for accounts like HELOC accounts.
Medicaid data match program. House Bill 1391, approved by the Governor and effective July 1, 2012, authorizes the Miss. Division of Medicaid to develop and operate a data match system with financial institutions to verify the assets of applicants for Medicaid assistance. Under the program, the Division can enter into agreements with banks and other depository institutions to perform a data match. The Division would, on at least a quarterly basis, provide through an automated process a list containing the name, taxpayer 1D number and other identifying information for each applicant for Medicaid assistance and any other person whose assets are required to be disclosed in order to determine the applicant’s eligibility, and the institution will report back to the Division the existence of any accounts held for those persons. If requested by the Division, the bank will also report back the account numbers, balances and all names, addresses and taxpayer ID numbers of all persons on those accounts. If necessary, the Division can then request additional information as needed to determine the applicant’s eligibility. The law states that a participating institution is immune from any civil or criminal liability for providing the information requested and adds a new exception to Miss. Code §81-5-55, a state law which prohibits a bank from disclosing the name of any depositor or the amount of the deposit except when required in legal proceedings or in accordance with certain other listed exceptions. The new exception to §81-5-55 for the Medicaid data match is contingent upon the Division of Medicaid certifying to the bank that the Division has on file an effective written authorization from the depositor authorizing the disclosure of that information. The legislation says that the Division will reimburse the financial institution for the reasonable cost of conducting the data match and for responding to requests for information, and the amount of the reimbursement will be determined in accordance with the cost reimbursement provisions under the Federal Right to Financial Privacy Act.
Participation in the data match program is voluntary on the part of financial institutions. However, the law requires the Division of Medicaid to report to the legislature by December 13, 2013 on the level of participation by financial institutions in the state, the cost savings to the Division from the program and its expenses for the program including reimbursements to financial institutions. There is some concern that if the Division does not get a good number of banks to participate, the legislature may revise the law and make participation mandatory. The program will be implemented through a written agreement between each bank and the Division of Medicaid, and a bank may want to review that contract carefully and consult with its legal counsel before signing and committing to participate in the program.
