HB 2674 was signed by the Governor on April 22, 2019. The bill clarifies that Guaranteed Asset Protection Waivers are not insurance and provides a definition of Guarantee Asset Protection Waivers. Effective 90 days after sine die adjournment.

INDIANA

HB 1136 was signed by the Governor on May 6, 2019. The bill amends the Indiana Uniform Consumer Credit Code and addresses the allowable delinquency charge. The bill applies to consumer credit sales (§24-4.5-2-203.5) and consumer loans (§24-4.5-3-203.5). It changes the permitted delinquency charge from an adjustable amount to a set amount, depending on the transaction’s payment frequency. Delinquent payments are payments that are not paid within 10 days after the scheduled due date. Under the bill, the allowable delinquency charges are:

• $5, if installments are due every 14 days or less
• $25, if installments are due every 15 days or more; or
• $25, on a single installment due at least 30 days after the sale or loan is made.

The bill adds a provision that states a creditor may not charge a delinquency charge if the only delinquency is attributable to a delinquency charge assessed on an earlier installment.

The bill also modifies the allowable transaction fees for a revolving loan account, stating the fee may not exceed the greater (previously the “lesser”) of 2% of the amount of the transaction or $10. SB 80 similarly changes the language to “the greater of.” Effective July 1, 2019.

HB 1237 became Public Law 245 on May 5, 2019. The bill retroactively creates a ceiling of $200 for a “fair” document preparation fee. The bill retroactively applies, effective July 1, 2013.

MARYLAND

HB 1154 and SB 693 modify the Maryland Personal Information Protection Act. The Act creates security breach investigation and notification requirements. Effective October 1, 2019.

NEW YORK

On April 29, 2019, the Department of Financial Services announced the appointment of Katherine A. Lemire to its newly created Consumer Protection and Financial Enforcement Division (also known as the “mini-CFPB”).

OKLAHOMA

SB 720 creates the Oklahoma Small Lenders Act. The bill creates a new license for “small lenders,” beginning on January 1, 2020. The bill terminates all Deferred Deposit Lending Act licenses, effective August 1, 2020. Under the new Oklahoma Small Lenders Act, a “small loan” is an unsecured loan that’s term is between 60 days and 12 months. To make a small loan, the lender must be licensed by the Department of Consumer Credit, beginning on August 1, 2020. The act specifies the applicable license requirements. It also creates disclosure requirements, including that each customer must be given a written explanation, in clear, understandable language, of the fees and charges to be charged by the licensee. Effective November 1, 2019.

SB 732 was signed by the Governor on April 25, 2019. The bill modifies the charges allowed for loans made pursuant to § 3-508B, as follows:

Loan Amount*                  Acquisition Charge                                    Handling Charge

Up to $29.99                     1/10 of the amount of principal              $1.00 per $5.00 of principal

$30.00-$35.00                 1/10 of the amount of principal              $3.00 per month

$35.01-$70.00                  1/10 of the amount of principal              $3.50 per month

$70.01-$100.00                1/10 of the amount of principal              $4.00 per month

$100.01-$150.00              1/10 of the amount of principal              $4.50 per month

$150.01-$200.00             1/10 of the amount of principal              $5.00 per month

$200.01-$250.00            1/10 of the amount of principal              $5.50 per month

$250.01-$300.00            1/10 of the amount of principal              $6.00 per month

Effective November 1, 2019.

*Note: The Loan Amounts are as listed in the Code, but these are subject to the annual changes in dollar amounts by the Oklahoma Department of Consumer Credit. We reported the 2019 dollar adjustments in the April newsletter.  At the moment, there does not appear to be alignment between the provisions of this bill and the 2019 bracket adjustments.

TEXAS

The dollar amount brackets and ceilings subject to adjustment in the Texas Financial Code will increase as follows:

Consumer Loans – §342.201

(Add-On Rates)

$18 per $100 per annum of the cash advance to $2,130 plus,

$  8 per $100 per annum of the excess to $17,750

OR

(Simple Melded Rates)

30% per annum of the cash advance to $3,550 plus,

24% of the excess to $7,455 plus,

18% of the remainder to $17,750

Retail Installment Sales (“Other Goods”) – §345.055

$12 per $100 per annum of the principal balance to $3,550 plus,

$10 per $100 per annum of the excess to $7,100 plus,

$  8 per $100 per annum of the remainder.

Effective July 1, 2019.

WASHINGTON

HB 1071 regulates breaches of security systems that protect personal information. The bill adds new definitions relating to the “breach of the security of the system.” The bill amends certain notice requirements for breaches of particular types of data, such as username and password. The act also provides the specific information which must be included in a notice of a potential breach to the attorney general. Notice to consumers must be provided within 30 calendar days of when the breach was discovered (changed from 45 days). The bill identifies what constitutes compliance with the security requirements based on the type of institution (e.g. a financial institution as certain criteria). Effective March 1, 2020.

Effective State Changes

ARIZONA

HB 2177 was signed on April 1, 2019. It modifies the Arizona Regulatory Sandbox Program. Effective 90 days after adjournment.

HB 2418, approved on April 9, 2019, adds a provision to the Arizona Code requiring dealers to follow certain data protection requirements. Under the bill, dealers may submit or push data to manufacturers or third parties but may not allow these parties access to their dealer data system. The bill further restricts what a manufacturer or third party may do with the data they receive from a dealer. Effective 90 days after adjournment.

ARKANSAS

HB 1672 was approved by the Governor on April 8, 2019. The bill specifies that GAP waivers are not insurance. The bill includes definitions related to GAP waivers, requirements for offering GAP waivers, required disclosures, and cancellation requirements. Effective 90 days after adjournment.

SB 494 was approved on March 20, 2019 and establishes a $10 processing fee for the use of an expedited title processing service. Effective 90 days after adjournment.

IDAHO

HB 86 adds a sales tax exemption on a motor vehicle dealer’s labor or service charges when installing accessories to new factory-delivered vehicles. Effective July 1, 2019.

IOWA

HF 260 was signed by the Governor on April 15, 2019. Under the Act, the threshold for the superintendent to establish the maximum rate of interest charges on consumer loans increases to an unpaid principal balance of $30,000 (up from $10,000). The act also includes a restriction on the collection of a minimum charge upon prepayment when the creditor has collected a service charge. Effective July 1, 2019.

INDIANA

The Department of State Revenue published Information Bulletin #28S regarding taxation of documentation fees in January 2019. Specifically, the bulletin states that “fees that meet the definition of a separately stated ‘convenience fee’ are not subject to sales tax.” But dealers may still charge a separate documentation fee, in addition to the convenience fee, which will be subject to sales tax. Effective April 2, 2019.

MARYLAND

In 2018, Maryland established the Maryland Financial Consumer Protection Commission. Because the legislature failed to reauthorize the commission, it will sunset on June 30, 2019.

MICHIGAN

On December 18, 2018, Governor Snyder approved HB 6498. The bill is known as the “motor vehicle franchise act.” Under the act, among other provisions, a manufacturer is prohibited from preventing a dealer from charging a consumer a documentary preparation fee. Effective March 28, 2019.

MINNESOTA

The Minnesota Department of Commerce published guidance on licensing requirements in the state on April 5, 2019. The guidance formalizes the Department’s requirement that a company that purchases retail installment contracts from Minnesota dealers must hold a sales finance company license. This applies to companies regardless of whether they have a physical presence in Minnesota. Effective for contracts executed after July 1, 2019.

NEW MEXICO

HB 6 was signed by the Governor on April 4, 2019. Among other tax-related provisions, the bill increases the rate of the motor vehicle excise tax. The applicable excise tax under the bill is 4% and is applied to the price paid for the vehicle or the reasonable value of the vehicle, under certain conditions. Allowances granted for vehicle trade-ins may be deducted from the price paid for the vehicle or the reasonable value. Effective July 1, 2019.

HB 150 became law on April 3, 2019. The bill applies to installment loans covered by the Installment Loan Act and the Small Loan Act. The bill expands annual lender reporting requirements and clarifies allowable loan insurance. The bill applies the limitation on permitted charges (not to exceed the lesser of $200 or 10% of the principal) specifically to a precomputed loan transaction, as opposed to simply “any such installment loan.” The bill prohibits any additional fee, interest or any other charge not specifically permitted for under the section. Effective July 1, 2019.

SB 350 was signed by the Governor on April 4, 2019. The bill amends definitions related to service contracts. It addresses a holder’s right to return a service contract, refund requirements, and restrictions on automatic renewal notices. Effective 90 days after adjournment of the Legislature.

NEW YORK

SB 7074 was signed on December 28, 2018. The bill raises the threshold for the exclusion of the plain language contract requirement to agreements involving amounts of $100,000 or less. Effective for contracts entered into after June 26, 2019.

NORTH CAROLINA

SB 162 modifies the origination fee banks or savings institutions may charge for a loan or extension of credit not secured by real property to the following:

Principal Amount	Maximum Origination Fee
Loans with principal of $100,000 or greater:	1/4 of 1% of the principal amount
Loans with principal of less than $100,000:
$0 to $1,499.99	$100
$1,500 to $19,999.99	$150
$20,000 to $29,999.99	$175
$30,000 to $49,999.99	$200
$50,000 to $99,999.99	$250

The bill states that a specific loan with a principal amount of less than $5,000, the APR shall not exceed 36%, inclusive of fees. The APR is to be computed in accordance with the Truth in Lending Act. There is no limit on fees for loans in excess of $300,000.  The bill also amends late charges for loan contracts made by banks or savings institutions, limiting the amount of late charges for loans with an original principal balance of greater than or equal to $1,500, to: the greater of $35 or 4% of the amount of the payment past due. Effective immediately (April 1, 2019).

NORTH DAKOTA

HB 1195 creates contract requirements applicable to service contract providers. Effective on contracts entered after July 31, 2019.

HB 1292 amends the definition of “purchase price” as it relates to the application of sales or use tax. Effective July 1, 2019.

OKLAHOMA

The Department of Consumer Credit published dollar bracket adjustments. Included in the adjustments are the following:

Retail Installment Sales, § 2-201:

The greater of:

The dollar amounts under § 3-508(A) remain the same.

The maximum delinquency charge for consumer credit sales and consumer loans will increase from $25.50 to $26.00. Effective July 1, 2019.

UTAH

HB 95 was signed by the Governor on March 25, 2019. The bill increases the collection costs for a dishonored check from $20 to $35. Effective 60 days following adjournment of the legislature.

VIRGINIA

SB 1325 was approved on March 25, 2019. The bill establishes requirements for offering GAP Waivers and includes provisions relating to disclosures, cancellation, and refunds. Effective July 1, 2019.

OHIO

Ohio HB 123 applies to loans made after April 26, 2019. This affects Small Loans (§§ 1321.01-1321.19), Short-term Loans (§§ 1321.35-1321.48), and Second Mortgage Loans (§§ 1321.51-1321.60).  The Act defines lending criteria for Small Loan Licensees, revises allowable fees, addresses restrictions for Short-Term Loan Licensees and adds disclosure requirements, among other requirements. Effective on loans made after April 26, 2019.

MASSACHUSETTS

HB 4086 went into effect on April 11, 2019. The bill established and modified certain laws regarding consumer financial and credit information.

The State of Alabama proposed a new rule regarding the processing of registrations and other records for persons applying to be vehicle protection product warrantors. The Insurance Commissioner propagated this rule and the fee for registration and yearly renewal is $250.00—Chapter 482-1-162.  Effective April 21, 2019.

KENTUCKY

Governor Matt Bevin signed House Bill 285 on March 26, 2019. The law applies to consumer loan companies and creates a new application and appeal process for licensure. Additionally, it requires applicants to submit specific information for licensure, increases the licensing application fee, and establishes other financial requirements. The statute also changes how the commissioner may take adverse action against a licensee. The rates for supervised lending did not change, but HB 285 replaces a credit investigation fee with a loan processing fee. This new loan processing fee is 5% of the original principal amount up to $150.00.  Effective date 90 days after the end of the legislative session.

MISSISSIPPI

House Bill 925 was signed by Governor Phil Bryant on March 21, 2019. The act revises the definition of a vehicle service contract and defines road hazards subject to those contracts.  Effective July 1, 2019.

NORTH DAKOTA

House Bill 1204 allows a collection agency to collect a transaction fee of up to two and one-half percent of a payment over and beyond the principal amount owed by a debtor.  In order to collect the transaction fee, a collection agency must provide a no-cost payment option that it discloses to the debtor at the time when credit card information is taken.  The bill was signed by Governor Doug Burgum on March 6, 2019.  Effective August 1, 2019.

House Bill 1181 was signed by the governor on March 20, 2019. This bill clarifies that Guaranteed Asset Protection (“GAP”) Waiver agreements can be sold in North Dakota. These GAP Waiver agreements are not considered insurance and are exempt from insurance laws. Additionally a free-look period must be offered to the consumer and the agreement is subject tonumerous disclosures.

PENNSYLVANIA

The Pennsylvania Department of Banking and Securities released a comment letter on January 31, 2019 regarding the sale of GAP insurance products offered by licensees operating under the Consumer Discount Company Act. The letter clarifies the conditions that must be in place for the offer of a GAP product. The most important aspect of the sale of this GAP product wasthe licensee charged nothing in excess of the premium it was given under the GAP Master Policy. Effective immediately.

UTAH

The State of Utah joins a growing list of states creating their own financial technology regulatory sandbox. Governor Gary Herbert signed House Bill 378 on March 25, 2019.

VIRGINIA

House Bill 2600 was signed into law by Governor Ralph Northam on March 8, 2019. The bill is meant to crack down on unsolicited telemarketing calls. The law also establishes certain communications which would be exempt from prosecution, such as calls regarding debt collection, state and federal elections, and charity drives.  Effective July 1, 2019.

House Bill 2109 and its counterpart legislation Senate Bill 1325 both passed their respective caucuses in the Virginia General Assembly. Signed by the governor on March 26, 2019, this law applies to GAP Waivers. These products are agreements and not considered insurance under Virginia’s insurance laws. The measure prohibits a creditor from conditioning an extension or term of credit on the purchase of a GAP Waiver, requires a GAP Waiver to include particular disclosures, and allows for a free-look period for a purchaser. Finally, the law also establishes requirements for the cancellation of GAP Waivers and the refunding of consumers.  Effective July 1, 2019.

WEST VIRGINIA

On March 26, 2019, Governor Jim Justice signed House Bill 3143 into law. The bill alters the rate structure of regulated consumer lenders under the West Virginia Consumer Credit and ProtectionAct. Previously the law had limits of $2,000 and $10,000 to serve as boundaries for different applied interest rates.

Those rates have not changed but the limit amounts have been increased to $3,500 and $15,000 respectively. For loans up to and including $3,500, a regulated consumer lender may contract for an amount of 31% per year on the unpaid balance of the principal amount.  For loans from $3,500.01 up to and including $15,000, a regulated consumer lender may contract for an amount of 27% per year on the unpaid balance of the principal amount. For loans of $15,000.01 and greater, a regulated consumer lender may contract for an amount of 18% per year on the unpaid balance of the principal amount.  Effective Date July 1, 2019.

WYOMING

Wyoming’s Governor Mark Gordon signed HB 57 on February 19, 2019. This bill creates a financial technology sandbox and authorizes the Banking Commissioner or the Secretary of State to waive specified statutes or rules which impede the testing of innovative financial products or services. Only financial products or services which cannot be made available under existing law are eligible. The envisioned products or services can be tested in the financial sandbox for up to two years with the possibility of extension.  Effective January 1, 2020.

The State of Illinois has adjusted its document preparation fee for the year 2019 to $179.81. Effective January 1, 2019.

The Payday Loan Reform Act allows an Illinois lender to charge a $3 fee for verifying a borrower’s information and ability to enter into an installment payday loan. The fee increases from $1 on July 1, 2020.

MASSACHUSETTS

HB 4086 was signed into law on January 10, 2019 and establishes and modifies certain laws regarding consumer financial and credit information. The new statutes prohibit an employer, potential landlord, or other user from requesting or obtaining the credit report of a consumer unless the user first obtains the prior written, verbal or electronic consent of the consumer, and discloses the user’s reason for accessing the consumer report.

MICHIGAN

The State of Michigan has adjusted its “Doc Fee” under the Motor Vehicle Sales Finance Act to $220.00 for the following two years. Per Bulletin 2019-01-CF, the documentary preparation fee is adjusted based on the consumer price index and shall not exceed 5% of the cash price of the vehicle or $220.00, whichever is less.  Effective January 11, 2019.

NEW YORK

On December 28, 2018, the governor signed SB 86886 into effect which prohibits consumer credit reporting agencies from charging a fee for the placement, removal, or temporary lift of a security freeze following consumer credit reporting agency data breaches.

OHIO

On December 19, 2018, the governor signed Senate Bill 273 and enacted Section 3965.01-11 of the Ohio Code to “establish standards for data security and for the investigationof and notification to the Superintendent of Insurance of a cybersecurity event.” The Bill codifies new obligations for insurance companies authorized to do business in the state, including the requirement to implement and maintain an information security program based on the results of a risk assessment and develop an incident response plan for a defined cybersecurity event. Effective March 19, 2019.

WASHINGTON D.C.

On January 23, 2019 the Mayor signed into effect an order establishing in the Executive Branch of the District of Columbia’s government a Financial Services Regulatory Sandbox and Innovation Council. Within six months the Council shall produce a report to the Mayor of legislative, programmatic, and policy recommendations after investigating the feasibility of developing a regulatory sandbox for financial services to test innovative products, services, business models, and delivery methods. Effective January 23, 2019.

CONSUMER FINANCIAL PROTECTION BUREAU

The Consumer Financial Protection Bureau (“CFPB”) is proposing amendments to 12 CFR Part 1041—Payday, Vehicle Title, and Certain High-Cost Installment Loans rules—that would allow lenders to extend short-term, high-cost loans to consumers without satisfying the regulatory underwriting requirements. The stated rationale for these amendments is that the underwriting requirement was adopted without enough evidence or legal support. Additionally, consumers’ access to credit in states that permit payday and other short-term loans would be restricted.

The CFPB’s rule was adopted on Oct. 5, 2017 with most terms to take effect on Aug. 19, 2019. The Bureau is proposing to extend the compliance date of the rule’s underwriting duties by 15 months which would in effect eliminate the requirements before the August effective date.

Summary Review of State Changes in 2018

ALABAMA

HB 420 authorized and set requirements for guaranteed asset protection waivers. Effective January 1, 2018.

The State Banking Department updated Rule No. 155-2-2-.12, regarding Credit Insurance. Effective June 1, 2018.

ARIZONA

HB 2434 was signed by the Governor on March 22, 2018. The bill creates a “regulatory sandbox program” for new and innovative financial products. Effective July 16, 2018.

The Governor approved SB 1043 on April 5, 2018. SB 1043 updates the recording fees charged for certain real estate transactions. Effective June 30, 2019.

SB 1381 was signed by the Governor on April 5, 2018 and relates to the sale of service contracts in Arizona.

CALIFORNIA

AB 3163 was signed by the Governor on September 14, 2018 and allows for a $1 fee and $3 transaction fee to be passed on to the consumer for the purposes of submitting motor vehicle registration and titling transactions. Effective immediately.

AB 375 was approved by the Governor on June 28, 2018. The bill enacts the California Consumer Privacy Act of 2018. Effective January 1, 2020.

AB 237 was approved by the Governor on September 30, 2018. The Bill amends the Financial Code and adjusts the parameters under California’s “Pilot Program” for small loans. Effective January 1, 2019.

AB 3212 was signed by the Governor on September 19, 2018. The Bill expands certain protections to service members and expands the definition of service members who are eligible to benefit under the Bill. Effective January 1, 2019.

CONNECTICUT

Public Act No. 18-173 (HB 5490) was signed by the Governor on June 14, 2018. The Act modifies the maximum annual percentage rates for small loans. Effective October 1, 2018.

COLORADO

HB 18-1299 was signed by the governor on May 29, 2018. The act defines third-party providers in connection to an electronic registration transaction, lien transaction, or titling transaction. Effective July 1, 2019.

Proposition 111 was a ballot measure overwhelmingly supported by the voters that capped the yearly Annual Percentage Rate at 36% for short term loans. Effective February 1, 2019.

FLORIDA

SB 386 was signed by the Florida Governor on March 19, 2018. The bill amends Florida’s Consumer Finance Law. Effective July 1, 2018.

SB 920 defines and places certain limits on deferred presentment installment transactions. Effective July 1, 2019.

IDAHO

HB 521 / Chapter 116 provides for state regulation of motor vehicle service contracts. Effective July 1, 2018.

ILLINOIS

The maximum Document Preparation Fee a dealer can charge in 2018 is $175.94.  Effective January 1, 2019.

INDIANA

The Governor signed HB 1063 on March 19. Included in the law are provisions relating to records that must be maintained in relation to the sale of a motor vehicle. Effective July 1, 2018.

HB 1397 broadly addresses financial institutions and modifies various banking, consumer and financial services laws. GAP Agreements may be entered into, subject to certain restrictions and disclosures. The bill removes the language that requires the price of GAP waivers to be “reasonable.” Effective July 1, 2018.

SB 377 was signed by the Governor on March 13, 2018. This bill adds a provision that allows the Department of Financial Institutions to capture and monitor transaction level activity relating to small loans regulated under IC 24-4.5-7. Effective July 1, 2018.

The Indiana Department of Financial Institutions published guidance for GAP and Debt Cancellation Administrators on April 2, 2018. Effective July 1, 2018.

Indiana published Emergency Rule LSA Document #18-155(E) which implements certain credit, finance, and loan bracket updates, effective July 1, 2018.

In Bulletin 246, the Indiana Insurance Commissioner adjusted credit life and A&H rates effective January 1, 2019.

LOUISIANA

HB 522 / Act 592 was signed by the Louisiana Governor on May 28, 2018. The Act relates to motor vehicle service contracts. Effective February 1, 2019.

MAINE

LD 1506 authorized and set requirements for guaranteed asset protection waivers. Effective January 1, 2018.

LD 1894 addresses the treatment of GAP Waivers. Under the Act, GAP Waivers must be treated as a separate charge, not a finance charge or interest.

MARYLAND

SB 1068/ Chapter 732 was signed by the governor on May 15, 2018 and creates the Financial Consumer Protection Act of 2018. The governor signed a similar bill, HB 1634/Chapter 731 on the same day. The Act requires lenders of covered loans to be licensed in the state. Both laws are effective October 1, 2018.

HB 1297 increases the small loan threshold under the Maryland Consumer Loan Law from $6,000 to $25,000. Effective January 1, 2019.

MICHIGAN

On February 7, 2018, the Department of Insurance and Financial Services released Bulletin 2018-01-CF, which adjusts the Regulatory Loan Act Loan Processing Fees. Effective immediately.

MINNESOTA

The Minnesota Commerce Department published the periodic adjustment in dollar amounts effective July 1, 2018 through June 30, 2020.

MISSISSSIPI

SB 2929 was approved by the Governor on March 26. The bill clarifies that GAP waivers are not insurance and therefore exempt from state insurance laws. Effective July 1, 2018.

HB 811 was signed by the Governor on March 19, 2018. HB 811 reenacted the Mississippi Credit Availability Act, effective July 1, 2018.

NEBRASKA

LB 194 was approved by the governor on April 19, 2018. The bill modifies the Credit Services Organization Act, the Delayed Deposit Services Licensing Act, and the Nebraska Installment Loan Act. Effective January 1, 2019.

NEW HAMPSHIRE

New Hampshire updated Credit Life and A&H rates on January 30, 2018. The rates become effective on February 1, 2018 or at the time of policy renewal. HB 1687 removes a reference to how interest must be computed based on a 30-day month. Small loan, title loan, or payday lenders may not take a note or agreement in which there are blanks that are left to be filled in after the loan is made. Effective August 7, 2018.

NEW JERSEY

AB 4044 prohibits non-disclosure clauses in any agreement entered into by a consumer for the purchase or lease of a new motor vehicle. Effective April 6, 2018.

SB 2968 / Chapter 308 establishes an electronic lien and title system for motor vehicles in New Jersey. Once implemented, all lienholders, except those who do not normally engage in the business of financing motor vehicles, will be mandated to use the system within one year. Effective January 16, 2018.

SB 3555 amends R.S.39:3-27 to exempt non-profit organizations in the State that provide transportation services exclusively to persons with developmental disabilities from registration fees for motor vehicles. Effective January 16, 2018.

NEW MEXICO

HB 347 enacted the Installment Loan Fee Limits and Literacy Fund. The bill revised sections of the Small Loan Act, increasing the maximum amount of the loan to $5,000 and limiting the APR to 175%. Effective January 1, 2018.

Bulletin 2017-012 updated the Prima Facie Credit Life and A&H rates for 2018. Effective January 1, 2018.

The New Mexico Office of Superintendent of Insurance published Bulletin 2018-011 on July 31, 2018. The Bulletin distinguishes Property and Casualty GAP Insurance, Stand Alone GAP Insurance, and GAP Waivers.

NEW YORK

SB 5152 specifies that limitations on assignee liability for retail installment contracts shall be exclusive of any reasonable costs or attorney’s fees a court may award.  Effective January 1, 2018.

NORTH CAROLINA

HB 347 was enacted after overriding the Governor’s veto. The bill specifically addresses balloon payments when financing motorcycles. Effective December 1, 2018.

SB 411 expands the required use of the electronic lien system implemented by the Division of Motor Vehicles. Effective June 22, 2018.

OHIO

HB 199 modifies the Ohio Mortgage Loan Law and creates the Ohio Residential Mortgage Lending Act. Effective March 23, 2018.

HB 123, signed by the Governor on July 30, 2018, specifically addresses Small Loans, Short-term Loans, and Second Mortgage Loans. Effective October 28, 2018, but only applicable to loans made after April 26, 2019.

OKLAHOMA

SB 1151 was signed by the governor on April 25. The bill allows for a convenience fee for payments made by debit card, electronic transfer, electronic check, or other electronic means. Effective November 1, 2018.

The Department of Consumer Credit published changes in the dollar amounts for retail installment sales and small loans. Effective July 1, 2018.

OREGON

SB 338 clarifies the laws that govern guaranteed asset protection waivers. Effective January 1, 2018.

SOUTH CAROLINA

South Carolina Department of Insurance released Order 2017-03 which confirmed Prima Facie Credit A&H rates for 2018 will remain unchanged. Effective January 1, 2018.

The Department of Consumer Affairs released its biannual dollar bracket adjustment effective from July 1, 2018 through June 30, 2020.

Among the dollar bracket adjustments are consumer credit sale, consumer lease, and consumer loans. The default charges for retail installment sales will change to the greater of 5% of the unpaid installment, with a maximum of $18.50; or 40% of $7.40. Effective July 1, 2018.

On October 31, 2018, the South Carolina Department of Insurance published Order 2018-06 confirming Prima Facie Credit A&H rates for 2019. Effective January 1, 2019.

SOUTH DAKOTA

Signed by the Governor of South Dakota on March 1, 2018, HB 1082 amends the definition of a “business of lending money.” Effective July 1, 2018.

TENNESSEE

HB 1944 amends provisions of the Tennessee Code related to Tennessee Industrial Loan and Thrift Companies. Effective March 23, 2018.

TEXAS

The dollar amount brackets and ceilings subject to adjustment in the Texas Financial Code increased for Consumer Loans and Retail Installment Sales. Effective July 1, 2018.

VIRGINIA

On August 22, 2018 the Commonwealth of Virginia’s Bureau of Insurance proposed adjusted prima facie rates and these were adopted for a three-year period. Effective January 1, 2019.

WASHINGTON D.C.

The Washington D.C. City Council passed a bill which establishes rules for the administration, issuance, sale, registration, and regulation of service contracts. Effective May 22, 2019.

WASHINGTON

HB 1056 provides protections for military service members in Washington. The bill expands the definition to include an active member who is either stationed in or a resident of Washington state. Effective June 7, 2018.

WEST VIRGINIA

HB 4186 was sent to the Governor on March 10, 2018 and became law without the Governor’s signature on March 28. The bill clarifies that GAP Waivers in West Virginia are not insurance. Effective June 8, 2018.

WISCONSIN

A July 21, 2017 Bulletin updated the Prima Facie Credit Life and A&H insurance rates. Effective January 1, 2018.

WI AB 663 / Act 161 was signed by the Governor on March 28. The bill provides that GAP waivers may be offered or sold in connection with a credit sale or lease of a vehicle. Effective September 1, 2018.

 

Summary Review of Federal Changes in 2018

ANNUAL TILA THRESHOLD EXEMPTION

The CFPB published its annual Truth in Lending Act threshold adjustment, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. For 2019 the exemption threshold amount for Regulation M and Z is increased from $55,800 to $57,200. Effective January 1, 2019.

HOEPA and ATR/QM

Specific dollar threshold adjustments were announced on August 27, 2018 through the Bureau of Consumer Financial Protection. Updates to the Ability to Repay/ Qualified Mortgage Rule, (ATR/QM) and Home Ownership Equity Protection Act (HOEPA), among others, were announced and become effective January 1, 2019.

HOEPA Annual Threshold Adjustments:

• The adjusted total amount of the loan threshold will be $21,549, up from $21,032
• The adjusted points and fees trigger will be $1,077, up from $1,052

ATR/QM Threshold Adjustments – To meet qualified mortgage criteria, the combined points and fees can’t exceed the following:

• 8% of total loan amount for loans less than $13,468
• $1,077 for loans greater than or equal to $13,468 but less than $21,549
• 5% of total loan amount for loans greater than or equal to $21,549 but less than $64,648
• $3,232 for loans greater than or equal to $64,648 but less than $107,747
• 3% of total loan amount for loans greater than or equal to $107,747

Effective State Changes

COLORADO

Proposition 111 was a ballot measure overwhelmingly supported by the voters of Colorado and approved on November 6, 2018. The proposition capped the yearly Annual Percentage Rate at 36% for short term loans, also known as “payday loans.” Maintenance fees and any other charges may not be included in short term loans unless expressly authorized by statute. Effective February 1, 2019.

VIRGINIA

On August 22, 2018 the Commonwealth of Virginia’s Bureau of Insurance proposed adjusted prima facie rates and these were adopted for a three-year period. The Accident & Sickness rates for 2019 were updated.

The 12-month rate for $100 of Initial Insured Indebtedness will be as follows:

• 14-day Retro: $1.73
• 30-day Retro: $1.24

Pursuant to Case No. INS-2018-00030, the credit life insurance rates will be $0.6228 per month per $1,000.00 of outstanding insured indebtedness if premiums are payable on a monthly outstanding balance basis.

The rate per $100.00 of initial indebtedness repayable in 12 equal monthly installments is $0.3975.

Effective January 1, 2019.

WASHINGTON D.C.

The Washington D.C. City Council passed a bill which establishes rules for the administration, issuance, sale, registration, and regulation of service contracts. That bill was signed by the Mayor on November 23, 2018.

The law establishes new consumer protection and regulatory duties for the Commissioner of the Department of Insurance Securities and Banking and specifies that a service contract is not insurance for the purposes of District law.

Effective May 22, 2019.

CFPB ANNUAL REGULATION M & Z ADJUSTMENTS

The CFPB published its annual Truth in Lending Act threshold adjustment, as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.

For 2019 the exemption threshold amount for Regulation M and Z is increased from $55,800 to $57,200.

Effective January 1, 2019.

CALIFORNIA

California’s Pilot Program for Small Loans will go into effect on January 1, 2019. This Pilot Program was originally reported in the September / October Consumer Finance Newsletter.