Effective State Changes

ARIZONA

Governor Ducey passed HB 2424 on March 24, 2021. The bill empowers the Director of the Department of Transportation to contract with an association of new motor vehicle dealers to manage a lien recording system at no cost to the state. Effective 90 days after sine die adjournment.

ARKANSAS

HB 1042 became Act 146 on February 24, 2021. Act 146 repeals the long-term rental vehicle excise tax. Effective 90 days after sine die adjournment.

SB 184 was approved by Governor Asa Hutchinson on March 25, 2021. The bill repealed the Arkansas Pawnbroker Act. Effective 90 days after sine die adjournment.

SB 225 was signed into law on March 17, 2021. The bill adds a definition of a plug-in electric vehicle and plug-in hybrid electric vehicle under the Arkansas code. Plug-in electric vehicle owners will now pay a fee of $100 to register their vehicle, while the fee for hybrid electric vehicle owners has been reduced to $50. Effective January 1, 2022.

ILLINOIS

On March 23, 2021 Governor Pritzker signed SB 1792 which enacts The Predatory Loan Prevention Act. This law goes into effect immediately and will significantly impact the extension of credit in the state of Illinois. Exempt institutions include federally chartered banks, savings banks, savings and loan associations and credit unions. The law replaces existing maximum charge statutory requirements with a 36% Annual Percentage Rate limit computed like the MAPR for the Military Lending Act and extends to consumer loans, motor vehicle sales, and retail installment sales. Effective immediately.

IOWA

Republican Governor Reynolds enacted Iowa House File 235 on March 8, 2021. The new law removes the requirement that a consumer credit transaction bear interest in order to collect a service charge. The new law also prohibits a creditor from collecting a minimum charge upon prepayment in-full when a service charge is collected on a non-interest bearing consumer credit transaction. Effective July 1, 2021.

MISSISSIPPI

HB 1075 was signed by Governor Reeves on March 17, 2021. The Bill reenacts the Mississippi Credit Availability Act through July 2026. Effective July 1, 2021.

NEBRASKA

Governor Rickets signed LB 363 into law on March 17, 2021. The bill is primarily concerned with defining sales finance companies for licensing who offer installment sales contracts. Effective immediately, March 17, 2021.

NEW YORK

As a follow up to the recently enacted A10118-A/S05470B, on February 16, 2021 Governor Andrew Cuomo signed SB 898 into law. The law exempts financing transactions of at least $50,000 to auto dealers from the requirements for commercial financing providers to disclose critical information regarding the cost of financing and other terms to commercial borrowers which was recently enacted. Effective January 1, 2022.

SOUTH DAKOTA

HB 1053 was signed into law by Governor Noem on March 3, 2021. The new law requires an annual fee of $50 to be charged to the owner of an electric motor vehicle. The new fee will not apply to a motorcycle propelled by an electric motor. Effective July 1, 2021.

SB 8 was signed into law February 10, 2021. The bill concerns supervised banks and credit unions, as well as foreign banks and trusts. The law sets up new definitions for these entities, rules for examinations, and creates a system for the promulgation of rules enforcement and allowed fees. Finally, the law defines which credit service charges banks may instate. Effective July 1, 2021.

VIRGINIA

The Virginia Consumer Data Protection Act (“CDPA”) became law on March 2, 2021. The new data privacy law establishes rights for Virginia consumers to control how companies use their personal data. The CDPA dictates how companies must protect personal data in their possession and respond to consumers exercising their rights regarding such personal data. Effective January 1, 2023.

WYOMING

Signed into law on February 9, 2021, HB 8 consolidates consumer credit provisions for loans. In addition, the law caps a consumer loan finance charge at 36% per year on the unpaid balance of the principal that is equal or less than $1,000, and 21% on the unpaid balances above $1,000. Effective July 1, 2021.

MASSACHUSETTS

On January 14, 2021, the Massachusetts Governor signed H5250 into law. Among various other requirements, the bill added a requirement that student loan servicers must be licensed in the state. Effective July 1, 2021.

MICHIGAN

The Michigan Department of Insurance and Financial Services issued Bulletin 2021-04-CF on January 15, 2021. This Bulletin adjusted the documentary preparation fee cap to $230. The fee is the lesser of $230 or 5% of the cash price of the motor vehicle. Effective immediately.

NEW YORK

On December 23, 2020, Governor Cuomo signed into law A10118-A/ S05470B which requires certain disclosures for commercial financing transactions. There are a variety of disclosure requirements, among them is the requirement to disclose an Annual Percentage Rate (“APR”) calculated in accordance with the Truth in Lending Act and Regulation Z. Effective June 21, 2021.

PENNSYLVANIA

Pennsylvania’s maximum allowed document preparation fee depends on whether the motor vehicle dealer provides electronic services for registration, title, license, and tax documents. The fee is adjusted annually subject to increases in the Federal Consumer Price Index. The maximum fee for 2021 has been risen to either $328 or $394, with the latter applying to electronically filed documents. Effective January 1, 2021.

WEST VIRGINIA

Following the meeting of the West Virginia Dealer Advisory Board on December 17, 2020, the Commissioner of West Virginia’s Department of Transportation’s Division of Motor Vehicles raised the amount a motor vehicle dealer could charge for documentary fee to $499. Effective immediately.

CONSUMER FINANCIAL PROTECTION BUREAU

On January 20, 2021, Director Kathleen Kraninger resigned as the Director of the CFPB at the request of President Joe Biden’s Administration. President Biden has nominated FTC Commissioner Rohit Chopra as the next director of the bureau. Chopra had previously served as the assistant director at the CFPB where he focused on student lending. Currently, Daniel Ueijo is the Acting Director until Mr. Chopra’s nomination is confirmed by the U.S. Senate.

Review of State Changes Effective in 2020

CALIFORNIA

AB 539 limits a loan with a principal between $2,500 to $10,000 to receive charge at a rate not exceeding 36% plus the Federal Funds Rate. Effective January 1, 2020.

California’s governor signed a series of amendments to the California Consumer Privacy Act on October 11, 2019. Effective January 1, 2020.

On June 8, 2019, California published the fee adjustments to the Vehicle Code under 13 CA ADC § 423.00. Effective January 1, 2020.

GEORGIA 

SB 462 changes the Georgia Industrial Loan Act to the Georgia Installment Loan Act. Effective July 1, 2020.

The Georgia Department of Banking and Finance adopted Rules relating to installment lending on August 19, 2020. Effective September 8, 2020.

HAWAII

SB 409 establishes an annual registration surcharge of $50.00 for electric and alternative fuel vehicles. Effective January 1, 2020.

ILLINOIS

The State of Illinois has adjusted its document preparation fee for the year 2020 to $300.00. Effective January 1, 2020.

The Payday Loan Reform Act allows an Illinois lender to charge a $3 fee for verifying a borrower’s information. Effective July 1, 2020.

SB 1624 made changes to the Personal Information Protection Act by putting in place new reporting requirements. Effective January 1, 2020.

Illinois P. A. 101-0031 provides that for sales and purchases of motor vehicles, the “selling price” includes the value of or credit given for a traded-in first division motor vehicle up to $10,000. Effective January 1, 2020.

INDIANA

Senate Act 395 revises the maximum charges allowed under the Indiana Code for both retail sales and consumer loans. Effective July 1, 2020.

MARYLAND

SB 192 increases the processing fee dealers may charge to $500. Effective July 1, 2020.

MASSACHUSETTS

Massachusetts Bulletin 2019-09 updates Credit Life and Credit A&H rates for motor vehicles. Effective from January 1, 2020 – December 31, 2022.

MICHIGAN

HB 4411 amends statutes regulating credit services organizations. Effective January 28, 2020.

MINNESOTA 

The Minnesota Commerce Department published their periodic adjustment in dollar brackets effective July 1, 2020 through June 30, 2022.

Minnesota raised the motor vehicle document preparation fee from $100 to $125. Effective July 1, 2020.

MISSOURI

SB 599 allows traditional installment loan lenders to charge a convenience fee for payments made by a debit/credit card. Effective August 28, 2020.

NEBRASKA

Initiative 428 limits payday lenders to charge a 36% APR. Effective December 8, 2020.

NEW JERSEY

AB 2669 expands coverage of Service Contracts to leased motor vehicle for excess wear and use protection. Effective September 14, 2020.

SB 2998 requires consumer lenders providing credit agreements with lender-placed insurance to disclose these policies. Effective April 12, 2020.

NEW MEXICO

Office of Superintendent of Insurance published Bulletin 2019-018 regarding the acceptable Credit Life and Credit A&H premium rates. Effective April 1, 2020.

NEW YORK

The SHIELD Act amends New York’s current data breach notification law. Effective March 21, 2020.

SB 3631 increased the number of covered items under service contracts. Effective December 23, 2019.

OHIO

The Ohio Department of Insurance issued a memorandum revising prima facie Credit Insurance rates effective January 1, 2020.

OKLAHOMA

SB 720 created the Oklahoma Small Lenders Act. The bill created a new license for “small lenders,” beginning on January 1, 2020.

The Department of Consumer Credit published the changes in dollar brackets for Retail Installment Sales and Consumer Loans. Effective July 1, 2020.

SB 1682 preempts any local government ordinances for businesses regulated by the Department of Consumer Credit. Effective November 1, 2020.

RHODE ISLAND

HB 5674 defines service contracts and clarifies that service contracts are not insurance and not subject to the insurance code. Effective January 1, 2020.

The maximum Documentary Preparation Fee for motor vehicle dealers increased from $200 to $400. Effective January 19, 2020.

SOUTH DAKOTA

SB 14 defined which data must be included with the registration and plates for motorcycles, snowmobiles, passenger vehicles, and trailers. Effective July 1, 2020.

SOUTH CAROLINA

The South Carolina Dept. of Insurance published orders 2019-04, 2019-05, and 2019-06 confirming Prima Facie Credit A&H and Property rates. Effective January 1, 2020.

HB 4244 defines service contracts and warranties. Effective May 7, 2020.

The Department of Consumer Affairs released its biannual dollar adjustments for consumer credit sales, consumer leases, and consumer loans. Effective July 1, 2020.

TEXAS

Texas published the dollar amount brackets and ceilings adjustments for Retail Installment Sales and Consumer Loans. Effective July 1, 2020.

VERMONT

HB 942 provides increased incentives for Vermont residents to purchase battery or plug-in electric vehicles. Effective July 1, 2020.

WASHINGTON

SB 6187 modifies data breach notification requirements for state and local agencies by adding to the definition of “personal information.” Effective June 11, 2020.

WEST VIRGINIA

HB 4149 more clearly defines motor vehicle warranties, service agreements, and maintenance agreements. Effective June 5, 2020.

HB 4621 enacted a Fintech Regulatory Sandbox program. Effective June 5, 2020.

WISCONSIN

SB 162 bill waived the title transfer fee for transfer of a title made to a surviving spouse or domestic partner. Effective March 3, 2020.

WYOMING

HB 57 created a Financial Technology Sandbox. Effective January 1, 2020.

Review of State Changes Effective in 2021 & Beyond

CALIFORNIA

AB 85 requires used vehicle dealers to collect and remit to the Department of Motor Vehicles applicable sales tax. January 1, 2021.

AB 713 excludes from the CCPA deidentified information pursuant to a federal law, medical or other protected information. Effective January 1, 2021.

AB 1864 renamed the “Department of Business Oversight” the “Department of Financial Protection and Innovation” and enacted the California Consumer Financial Protection Law. Effective January 1, 2021.

AB 2196 extended the sunset date for the Pilot Program for Increased Access to Responsible Small Dollar Loans. Effective through January 1, 2028.

AB 3254 requires translation of contracts for persons engaged in a trade or business who negotiate primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean. Effective January 1, 2021.

SB 908 enacted the Debt Collection Act (“DCLA”). Effective January 1, 2022.

Californian’s voted to affirm Proposition 24 regarding expanded consumer privacy protections. Effective January 1, 2023.

GEORGIA

HB 1039 provides for new written or electronic notifications to consumers who enter service contracts. Effective January 1, 2021.

ILLINOIS

The State of Illinois increased its document preparation fee to $303.60. Effective January 1, 2021.

INDIANA

Indiana published dollar adjustments under the consumer credit code for sales, supervised loans, and small loans. Effective January 1, 2021 – December 31, 2023.

IOWA

Iowa released new regulations increasing the special annual registration fees for electric vehicles. Effective January 1, 2021 and January 1, 2022.

MINNESOTA

HB 4556 modifies the motor vehicle registration tax, so that the formula is based on the MSRP. Effective January 1, 2021.

NEW MEXICO

SB 151 allows an electronic signature for the application of a vehicle’s registration and certificate of title. Effective January 1, 2021.

SOUTH CAROLINA

Orders 2020-03, 2020-04, and 2020-05 confirmed Prima Facie Credit A&H and Credit Property rates for 2021. Effective January 1, 2021 – December 31, 2021.

UTAH

HB 37 defines “Vehicle Service Contracts” for the repair or maintenance of a motor vehicle. Disclosure requirements are effective January 1, 2021.

VIRGINIA

HB 789 sets a maximum interest rate of 36% for Installment Loans (loans $300-$35,000), Open-End Credit Plans, Short Term Lenders (loans up to $2,500), and Motor Vehicle Title Loans. Effective January 1, 2021.

SB 77 requires the licensing of education loan servicers. Effective July 1, 2021.

WISCONSIN

Revised Prima Facie Credit Life and Credit Accident and Sickness Insurance rates were released on October 15, 2020.  Effective January 1, 2021 – December 31, 2024.

Review of Federal Changes Effective in 2020

CONSUMER FINANCIAL PROTECTION BUREAU

On February 26, 2020, the CFPB published a new Truth in Lending Act– Real Estate Settlement Procedures Act Integrated Disclosures FAQs.

The CFPB established a Pilot Advisory Opinion Program in response to commentary encouraging the Bureau to offer guidance in cases of regulatory uncertainty.

The CFPB released its final “Payday, Vehicle Title, and Certain High-Cost Installment Loans” rule on July 7, 2020.

DEPARTMENT OF DEFENSE

The Department of Defense amended the controversial Question #2 in its interpretation of the Military Lending Act. Effective February 28, 2020.

OFFICE OF THE COMPTROLLER OF THE CURRENCY

The OCC issued a final rule to determine when a national bank or Federal savings association considered the “true lender.” Effective 60 days after publication.

Review of Federal Changes Effective in 2021

CONSUMER FINANCIAL PROTECTION BUREAU

Dollar threshold adjustments were announced for the Ability to Repay/ Qualified Mortgage Rule, and Home Ownership Equity Protection Act. Effective January 1, 2021.

On October 30, 2020, the CFPB released the Final Rule for Debt Collection Practices—Regulation F. Effective November 30, 2021.

The CFPB published its annual TILA threshold adjustment, as required by the Dodd-Frank. Effective January 1, 2021.

Effective State Changes

CALIFORNIA

Californian’s voted to affirm Proposition 24 regarding expanded consumer privacy protections. The proposition would allow Californians to block companies from sharing personal information and limit businesses’ use of “sensitive personal information.” Effective January 1, 2023.

NEBRASKA

Nebraskans voted in favor of Initiative 428 which amends Nebraska statutes to reduce the amount that payday lenders can charge to a maximum annual percentage rate of thirty-six percent. In addition, the Initiative deems void and uncollectable any transaction made in violation of the cap made by a deferred deposit lender. Effective November 30, 2020, or thereafter, pending Governor’s Proclamation.

CFPB – ANNUAL REGULATION M & Z ADJUSTMENTS

The Consumer Financial Protection Bureau (“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 2021 the exemption threshold amount for Regulation M and Z will remain the same at $58,300. Effective January 1, 2021.

CFPB – DEBT COLLECTION PRACTICES – FINAL RULE

On October 30, 2020, the CFPB released the Final Rule for Debt Collection Practices—Regulation F. This regulation implements the Fair Dept Collection Practices Act (“FDCPA”). The Final Rule addresses electronic communications, e.g., email, text messages, and social media. The Final Rule also applies prohibitions on harassment or abuse, false or misleading representations, and unfair practices. The Final Rule will become effective one year after publication in the Federal Register. Effective November 30, 2021.

On September 25, 2020, the Governor signed Senate Bill 908 which enacted the Debt Collection Act (“DCLA”). The Act requires that anyone who engages in the business of debt collection—including debt buyers—must be licensed. Effective January 1, 2022.

INDIANA

On October 15, 2020, the Indiana Department of Financial Institutions published Emergency Rule LSA Document #20-549(E). This Rule adjusts the dollar amounts under the consumer credit code for sales, supervised loans and small loans. The applicable thresholds for sales and supervised loans remain unchanged. The threshold for small loans will move from $605 to $660. Effective January 1, 2021 – December 31, 2023.

SOUTH CAROLINA

On October 12, 2020, the South Carolina Department of Insurance published Orders 2020-03, 2020-04, and 2020-05 confirming Prima Facie Credit A&H and Credit Property rates for 2021. Under 2020-03, the Credit A&H rates for insurance sold in conjunction with consumer credit transactions in 2021 will remain unchanged from their current rates in 2020. The 12-month rate for $100 of Initial Insured Indebtedness will remain as follows:

14-day Retro:	$1.53
30-day Retro:	$1.44

Under Order 2020-04, Credit Property rates for Automobile Fire and Theft, Automobile Collision, and Household Goods – Dual Interest, have decreased. Household Goods – Single Interest remains the same.

Under Order 2020-05, the 3-day retroactive A&H rate for insurance sold in conjunction with loans will remain at $0.28 per $5.00 of monthly indemnity. Effective January 1, 2021 – December 31, 2021.

WISCONSIN

The Wisconsin Office of the Commissioner of Insurance released the Revised Prima Facie Credit Life and Credit Accident and Sickness Insurance rates on October 15, 2020.

Prima Facie Credit Life Insurance Premium Rates Per $100 Per Annum

Single premium decreasing life:	$0.38
Joint premium decreasing life:	$0.63
Single premium level life:	$0.70
Joint premium level life:	$ 1.17

Prima Facie Credit Life Insurance Premium Rates Per $1,000 Per Month

Single premium MOB life:	$0.585
Joint premium MOB life:	$0.977

Prima Facie Credit Accident and Sickness Premium Rates Per $100 Per Annum

14 Retro:	$1.01
14 Elim:	$0.56
30 Retro:	$0.71
30 Elim:	$0.52

Effective January 1, 2021 – December 31, 2024.

CONSUMER FINANCIAL PROTECTION BUREAU

The Consumer Financial Protection Bureau (“CFPB”) has released updated FAQs for the Real Estate Settlement Procedures Act (“RESPA”) and Regulation X. This updated FAQ relates to kickbacks, fee arrangements, gifts, promotional activities, and marketing services agreements.

The FAQs cover:

• An overview related to RESPA Section 8 generally, including what payments are prohibited and who is covered;
• RESPA Section 8(a)’s prohibited activities;
• Gifts and promotional activities under RESPA Section 8;
• And marketing service agreements.

Update published October 7, 2020.

The CFPB has also released new rules proposing to establish an Advisory Opinion (“AO”) Program. AOs issued under the program would be considered interpretive rules under the Administrative Procedure Act. These AOs would be in response to a request for clarification on interpretive questions relating to statutes and rules regulated by the CFPB. Comments requested by November 6, 2020.

OFFICE OF THE COMPTROLLER OF THE CURRENCY

The Office of the Comptroller of the Currency (“OCC”) issued a final rule on October 27, 2020, to determine when a national bank or Federal savings association makes a loan and is considered the “true lender”. Under the rule, as of the date of origination, if a bank is the lender in the loan agreement or funds the loan made, it is named as the lender. This includes situations where there is a partnership between a bank and a third party, like a marketplace lender. Effective 60 days after publication in the Federal Register.

CALIFORNIA

Assembly Bill 376 enhances the existing Student Loan Servicing Act. Among many provisions, this law would impose new requirements on a student loan servicer: timely posting, processing, and crediting of student loan payments, applying overpayments consistent with the best financial interest of the borrower, and applying partial payments to minimize late fees and negative credit reporting. Effective July 1, 2021.

The California Consumer Privacy Act of 2018 (“CCPA”), grants California consumers various rights in regards to their personal information being collected by a business. The act grants a consumer the right to request a business delete certain personal information. Assembly Bill 713 excepts from the CCPA information that was deidentified in accordance with federal law, or was derived from medical information, protected health information, individually identifiable health information, or identifiable private information. In addition, the CCPA requires a business to make certain disclosures to consumers in its online privacy policy; AB 713 will now require businesses to update that information once every 12 months. Effective immediately in part, and certain provisions on January 1, 2021.

Governor Gavin Newsome signed a flurry of legislation on September 25, 2020. Assembly Bill 1864 renames the “Department of Business Oversight” as the “Department of Financial Protection and Innovation.” This renamed department will continue its previous mandate and oversee laws relating to financial products and services in California. In addition, this legislation enacts the California Consumer Financial Protection Law (“CCFPL”) to strengthen consumer protections. The new department has the power to bring administrative and civil actions, issue subpoenas, promulgate regulations, hold hearings, issue publications, conduct investigations, and implement outreach and education programs. Finally, this bill establishes a new Financial Technology Innovation Office. Effective January 1, 2021.

Assembly Bill 2196 extends the sunset date for the Pilot Program for Increased Access to Responsible Small Dollar Loans. Effective through January 1, 2028.

Assembly Bill 2524 would repeal prohibitions in the Check Sellers, Bill Payers and Proraters Law, which prohibit a person from engaging in these businesses without a license from the Commissioner of Business Oversight. Effective January 1, 2021.

Also signed on September 25, 2020, Assembly Bill 3254 requires a person engaged in a trade or business who negotiates primarily in Spanish, Chinese, Tagalog, Vietnamese, or Korean to deliver a translation of the contract in the language in which the agreement was negotiated before execution to the other party. Effective January 1, 2021.

GEORGIA

Pursuant to the Georgia Administrative Code, the Georgia Department of Banking and Finance adopted Rules on August 19, 2020. Among various provisions, these rules cover License and Supervision Fees for various types of lenders; place of business, advertising, and other requirements; books and records requirements; standards regarding fines and penalties; licensing requirements; disclosure, charge, and debt collection restrictions. Specifically, the Rules require certain notices to consumers to be shown in the written loan agreement, including the number of payments, amount of payments, and due dates of payments. The Rules place restrictions on certain payment profiles, including limiting balloon payments, and requiring all other installment payments to be scheduled at regular intervals and in equal amounts. The Rules allow for monthly maintenance charges on installment loans, pursuant to O.C.G.A. Sec. 7-3-11, but require a refund if the consumer loan is terminated prior to its scheduled maturity date. The Rules further specify that maintenance charges are to be considered an additional charge and shall not be considered in the calculation of any interest, fees, or other charges. The Rules authorize closing fees, convenience fees, unaffiliated third-party fees, and late charges. Effective September 8, 2020.

IOWA

Iowa released new regulations increasing the special annual registration fees for electric vehicles under IA ARC 5178C. The original legislation was enacted because fuel tax revenue is declining as average fuel efficiency increases and electric vehicles become more common. Effective January 1, 2021 and January 1, 2022, respectively.

MISSOURI

Senate Bill 599 allows traditional installment loan lenders to charge a convenience fee or surcharge for payments made by a debit or credit card. Effective August 28, 2020.

NEW JERSEY

Assembly Bill 2669 expands coverage of Service Contracts to leased motor vehicle for excess wear and use protection. This means leased vehicles are now covered under Service Contracts for damage to tires, paint cracks or chips, interior stains, rips, or scratches, exterior dents or scratches, windshield cracks or chips, missing interior or exterior parts, or excess mileage that results in a lease-end charge. In addition, all Service Contracts must now replace a motor vehicle key or key-fob in the event it becomes inoperable, lost, or stolen. Effective immediately.

Effective State Changes

GEORGIA

On June 30, 2020 Senate Bill 462 was signed into law by Governor Brian Kemp. The law changes the Georgia Industrial Loan Act to the Georgia Installment Loan Act. It also makes the regulator of Georgia Bank Installment Loans the Department of Banking and Finance instead of the Industrial Loan Commissioner. The law’s structure is fundamentally the same as the Georgia Industrial Loan Act, but additional changes were needed to provide consistency throughout the Act. Effective immediately, applicable to installment loan agreements entered into on or after July 1, 2020.

House Bill 1039 provides for new written or electronic notifications to consumers who enter service contracts that contain lengthy automatic renewal provisions. Effective January 1, 2021.

SOUTH CAROLINA

On July 31, 2020, the South Carolina Department of Insurance published Bulletins 2020-07, 2020-08, and 2020-09 with proposed Prima Facie Credit A&H and Credit Property rates for 2021. The final rates will be published on or before October 1, 2020. Credit Property Insurance rates remain the same for Household Goods – Single Interest, while Automobile, Fire and Theft, Automobile Collision, and Household Goods – Dual Interest will be decreased by 10 percent from 2020 levels. The A&H rates for insurance sold in conjunction with consumer credit transactions in 2021 will remain unchanged from their current rates in 2020. The 12-month rate for $100 of Initial Insured Indebtedness will be as follows:

• 14-day Retro: $1.53
• 30-day Retro: $1.44

Pursuant to Order 2020-08, the 3-day retroactive A&H rate for insurance sold in conjunction with loans will remain at $0.28 per $5.00 of monthly indemnity. Effective January 1, 2021.

VERMONT

House Bill 942 provides increased incentives for Vermont residents to purchase battery or plug-in electric vehicles. Effective July 1, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

Specific dollar threshold adjustments were announced on July 17, 2020 through the Consumer Protection Financial Bureau. The CPFB is required to make adjustments to dollar thresholds based on annual changes in the Consumer Price Index. 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, 2021.

HOEPA Annual Threshold Adjustments:

• The adjusted total amount of the loan threshold will be $22,052, up from $21,980
• The adjusted points and fees trigger will be $1,103, up from $1,099

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

• 8% of total loan amount for loans less than $13,783
• $1,103 for loans greater than or equal to $13,783 but less than $22,052
• 5% of total loan amount for loans greater than or equal to $22,052 but less than $66,156
• $3,308 for loans greater than or equal to $66,156 but less than $110,260
• 3% of total loan amount for loans greater than or equal to $110,260

FEDERAL TRADE COMMISSION

The Federal Trade Commission released a Staff Report by the Bureau of Consumer Protection in July. Entitled “Buckle Up: Navigating Auto Sales and Financing.” The report highlights results from a previous study related to sales and financing which the Bureau encounters in their enforcement role.

OFFICE OF THE COMPTROLLER OF THE CURRENCY

On July 22, 2020, the Office of the Comptroller of the Currency (“OCC”) proposed a regulation regarding the ”true lender” concept when third parties are involved with banks as marketplace lenders. Under their proposal, a bank makes a loan if, as of the date of origination, it is named as the lender in the loan agreement or funds the loan. Comments on this new regulation must be received by the OCC on or before September 3, 2020.

CALIFORNIA

On June 29, 2020, Assembly Bill 85 was signed into law requiring used vehicle dealers to collect and remit to the Department of Motor Vehicles (“DMV”) applicable sales tax. Used vehicle dealers must remit applicable sales tax within 30 days from the date of sale. This bill also imposes a penalty for failure to timely remit sales tax. Effective January 1, 2021.

California Assembly Bill 82 requires the DMV to draft regulations in order to establish any additional requirements for implementing AB 85. The bill also eliminated a provision in AB 85 requiring the DMV to withhold vehicle registrations until the dealer pays sales tax and penalties. Effective January 1, 2021.

MARYLAND

Senate Bill 192—the Budget Reconciliation and Financing Act of 2020—increases the processing fee dealers may charge from $300 to $500, in addition to the purchase price of a vehicle. Effective July 1, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

The Consumer Financial Protection Bureau (“CFPB”) is establishing a Pilot Advisory Opinion Program in response to commentary encouraging the Bureau to offer guidance in cases of regulatory uncertainty. The CFPB announced this new program June 22, 2020 after receiving requests submitted under the Request for Information Regarding Bureau Guidance and Implementation Support.

The CFPB released its final “Payday, Vehicle Title, and Certain High-Cost Installment Loans” rule on July 7, 2020. The rule removes the “ability to repay” provisions targeted at payday lenders, which were originally implemented in 2017. Additionally, the CFPB has released compliance aids, FAQs, and an updated Small Entity Compliance Guide.

ILLINOIS

The Payday Loan Reform Act allows an Illinois lender to charge a $3 fee for verifying a borrower’s information. Effective July 1, 2020.

INDIANA

Senate Enrolled Act 395 revises the process for updating the maximum charges under the Indiana Code for both retail sales and consumer loans by reinserting the dollar bracket adjustments to January of odd number years. However, the rates currently remain unchanged from the rates effective through July 1, 2020. Precomputed loans and sales are prohibited as of July 1, 2020. In addition, a Prepaid Finance Charge is now allowed. Effective for sales or loans made on or after July 1, 2020.

MINNESOTA

The Minnesota Commerce Department published their periodic adjustment in dollar brackets effective July 1, 2020 through June 30, 2022. Effective July 1, 2020.

Under Minnesota’s Motor Vehicle Retail Installment Sales Act the motor vehicle document preparation fee rises from $100 to $125. Effective July 1, 2020.

OKLAHOMA

The Department of Consumer Credit published the changes in dollar brackets for Retail Installment Sales and Consumer Loans. Effective July 1, 2020.

SOUTH CAROLINA

The Department of Consumer Affairs released its biannual dollar bracket adjustment effective through June 30, 2022. Among the dollar bracket adjustments are consumer credit sales, consumer leases, and consumer loans. Effective July 1, 2020.

SOUTH DAKOTA

HB 1061 was signed into law by Governor Kristi Noem. The new law provides for the waiver of registration fees on motor vehicles owned by improvement districts. Effective July 1, 2020.

SB 14 defines which data must be included with the registration and plates for motorcycles, snowmobiles, passenger vehicles, and trailers. Effective July 1, 2020.

TEXAS

The dollar amount brackets and ceilings subject to adjustment in the Texas Financial Code for Retail Installment Sales and Consumer Loans. Effective July 1, 2020.

INDIANA

Senate Enrolled Act 395 was signed by Governor Eric Holcomb on March 18, 2020. The act significantly revises the maximum charges allowed under the Indiana Code for both retail sales and consumer loans by reinserting the dollar bracket adjustments to January of odd number years. This is a departure from the UCCC state historical norm of adjusting in July on even-numbered years. In addition, this law allows a creditor to charge a prepaid finance charge. Key changes effective for 2020:

• Loans have a maximum finance charge which is computed on the principal.
• Sales have a maximum credit service charge which is computed on the amount financed.
• Precomputed loans and sales are prohibited after June 30, 2020.
• The prepaid finance charge allowed by this law must be paid separately at consummation or withheld from the transaction proceeds. This prepaid finance charge for loans replaces the $50 origination fee allowed since 2012.

Effective for sales or loans made on or after July 1, 2020.

MINNESOTA

House Bill 4556 modifies deadlines, requirements for in-person appearances, state programs, and other statutory requirements caused by the COVID-19 pandemic. In addition, this bill modifies the motor vehicle registration tax, so that the formula is based on manufacturer’s suggested retail price (“MSRP”) without other costs or adjustments. Included changes in this bill:

• Increases the tax rate used for vehicles being newly registered, from 1.25% to 1.285%;
• Bases the registration tax calculation only on the MSRP;
• Clarifies how MSRP can be determined.

Effective January 1, 2021, or earlier if certain changes are enacted to the information technology system.

The Minnesota Commerce Department published the periodic adjustment in dollar amounts effective July 1, 2020 through June 30, 2022. The adjustments are based on a 10% increase. The dollar amount adjustments include:

• §47.59 Subd. 3                 Principal Subject to 33% Interest                           $1,275.00
• §47.59 Subd. 3                 Minimum Refund                                                             $8.50
• §47.59 Subd. 6                 Default Charges                                                              $8.84
• §47.59 Subd. 6                 Loan Administration Fee Threshold                     $ 7,344.00

Effective July 1, 2020.

Under Minnesota’s Motor Vehicle Retail Installment Sales Act the motor vehicle document preparation fee rises from $100 to $125.

Effective July 1, 2020.

OKLAHOMA

The Department of Consumer Credit published the changes in dollar amounts which will become effective July 1, 2020. Included in the adjustments are the following:

Retail Installment Sales, §2-201:

The greater of:

• 30% of the amount financed up to $1,590; plus
• 21% of the excess to $5,300; plus
• 15% of the remainder to $58,300.
• OR  21% Simple Interest

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

For loans subject to § 3-508(B) of the Oklahoma Code the maximum charge structure 

Loan Amount	Acquisition Charge	Handling Charge
Up to $158.95		$5.30 per $26.50 of principal
$158.96-$185.50	1/10 of the amount of principal	$15.90 per month
$185.51-$371.00	1/10 of the amount of principal	$18.55 per month
$371.01-$530.00	1/10 of the amount of principal	$21.20 per month
$530.01-$795.00	1/10 of the amount of principal	$23.85 per month
$795.01-$1,060.00	1/10 of the amount of principal	$26.50 per month
$1,060.01-$1,325.00	1/10 of the amount of principal	$29.15 per month
$1,325.01-$1,590.00	1/10 of the amount of principal	$31.80 per month

The maximum delinquency charge for consumer credit sales and consumer loans will increase from $26.00 to $26.50. Effective July 1, 2020.

Oklahoma Senate Bill 1682 was signed into law by Governor Kevin Stitt on May 21, 2020. The bill preempts any local government ordinance that restricts the location of or regulation of the interest rates and fees charged by a business that is licensed or regulated by the Oklahoma Department of Consumer Credit. Effective November 1, 2020.

SOUTH CAROLINA

The Department of Consumer Affairs released its biannual dollar bracket adjustment effective from July 1, 2020 through June 30, 2022. Among the dollar bracket adjustments are:

• The consumer credit sale, consumer lease, and consumer loans defined maximum amount changes from $92,500 to $105,000. (§2.104(1)(e), §2.106(1)(b), and §3.104(d), respectively).
• The maximum delinquency charge for sales and loans transactions changes from $18.50 to $21. (§ 2.203(1) and §3.203(1), respectively).
• The minimum delinquency charge changes from $7.40 to $8.40. (§ 2.203(2)).

Effective July 1, 2020.

UTAH

House Bill 37 defines “Vehicle Service Contracts” for the repair or maintenance of a motor vehicle. The bill addresses registration fees for service providers and conspicuous language requirements. This disclosure provision goes into effect on January 1, 2021 unlike the rest of the statute. Effective in part May 12, 2020; Disclosure requirements effective January 1, 2021. 

House Bill 318  modifies the Utah Code sections pertaining to Check Cashing and Deferred Deposit Lending. The modifications address registration, reporting, operational, and third party debt collection requirements. Effective May 11, 2020.

VIRGINIA

Democratic Governor Ralph Northam signed into law House Bill 789 and its companion Senate Bill 421 on April 22, 2020. The law does the following:

• Allows “access partners” to lend to Virginia citizens, if certain conditions are met.
• Identified various licensing requirements for lenders.
• Installment Loans
  • Sets a single 36% interest rate cap for installment loans between $300-$35,000.
  • Establishing requirements that loans between $300 and $35,000, be repayable in substantially equal installment payments with terms of no fewer than six and no more than 120 months.
  • Changes the allowed late payment fee from 5% of the installment amount to a flat $20 fee.
  • Allows a loan processing fee not to exceed the greater of $50 or 6% of the principal amount of the loan, up to a maximum of $150.
  • Requires specific contract disclosures, including the late fee and loan processing fee.
  • Raises the allowable check return for to $25.
• Open End Credit Plans
  • Sets a 36% rate cap on open-end credit plans.
• Short Term Lenders:
  • Relabels “payday lenders” as “short term lenders.”
  • Sets a 36% interest rate cap on short term loans which may not exceed $2,500.
  • Short term loans may be between 4 months and 24 months, unless certain criteria are met.
  • Allows a maintenance fee not to exceed 8% of the loan amount or $25.
  • Prohibits short term lenders from selling credit insurance and other ancillary products on these transactions.
• Motor Vehicle Title Loans
  • Limits interest to 36% maximum.
  • Allows for a monthly maintenance fee not to exceed 8% of the loan amount or $15.

Effective January 1, 2021.

Senate Bill 77 requires the licensing of qualified education loan servicers. Effective July 1, 2021.

WASHINGTON

On March 18, 2020 Governor Jay Inslee signed Senate Bill 6187 into law. This statute modifies data breach notification requirements for state and local agencies by adding to the definition of “personal information.” Effective June 11, 2020.

House Bill 2374 was signed into law on March 27, 2020. This law enacts changes to certain conditions and requirements between brand owners and their vehicle dealers for the sale of secondary products. A violation of any provision constitutes an unlawful practice under Washington State’s Consumer Protection Act. Some provisions include:

• A brand owner may not require a dealer to offer a secondary product or provide a disclosure not otherwise required by law.
• A brand owner may not prohibit a dealer from offering a secondary product.
• A brand owner may offer an incentive program to a dealer to encourage the dealer to sell or offer a specific secondary product.
• A lender who shares common control with a brand owner may not require a customer to purchase a secondary product from a particular provider, administrator, or insurer.

Effective June 11, 2020.

WEST VIRGINIA

HB 4621 was passed on March 7, 2020. This statute enacts West Virginia’s Fintech Regulatory Sandbox program. Effective June 5, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

On May 1, 2020, the CFPB published Bulletin 2020-02 – Compliance Bulletin and Policy Guidance: Handling of Information and Documents During Mortgage Servicing Transfers. The purpose of this publication is to provide guidance to residential mortgage servicers. The Bulletin includes examples of practices and policies which are designed to achieve success and fulfill regulatory requirements.

NEW MEXICO

New Mexico’s Governor Michelle Grisham signed Senate Bill 151 into law on March 4, 2020. The bill allows an electronic signature for the application of a vehicle’s registration and certificate of title. Effective January 1, 2021.

We are still awaiting a Bulletin from the NM Office of Superintendent of Insurance regarding the revised implementation date for the revised Life and A&H insurance rates. At the time publishing this material, the Bulletin has not been published. The expected implementation date is still April 1, 2020.

SOUTH CAROLINA

Governor Henry McMaster approved House Bill 4244 on February 7, 2020. The law seeks to define service contracts and warranties, as well as road hazards, theft protection programs and theft protection program warranties. Effective May 7, 2020.

SOUTH DAKOTA

House Bill 1061 was signed into law February 24, 2020 by Governor Kristi Noem. The new law provides for the waiver of registration fees on motor vehicles owned by improvement districts. These districts join select government and non-profit entities which waive these fees following the payment of the actual cost of license plates. Effective July 1, 2020.  

South Dakota Senate Bill 14 was signed the same day as House Bill 1061 and defines which data must be included with the registration and plates for motorcycles, snowmobiles, passenger vehicles, and trailers. Effective July 1, 2020. 

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 $2,190 plus,

$  8 per $100 per annum of the excess to $18,250

OR

(Simple Melded Rates)

30% per annum of the cash advance to $3,650 plus,

24% of the excess to $7,665 plus,

18% of the remainder to $18,250

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

$12 per $100 per annum of the principal balance to $3,650 plus,

$10 per $100 per annum of the excess to $7,300 plus,

$  8 per $100 per annum of the remainder.

Effective July 1, 2020.

WEST VIRGINIA

West Virginia joins a trend across state governments to more clearly define motor vehicle warranties, service agreements, and maintenance agreements by defining these provisions more clearly. Governor Jim Justice signed House Bill 4149 on March 7, 2020. Effective June 5, 2020.

WISCONSIN

Senate Bill 162 was signed by Governor Tony Evers on March 3, 2020. This bill waives the title transfer fee when an application for transfer of a title is being made by a surviving spouse or domestic partner. Effective March 3, 2020.

CONSUMER FINANCIAL PROTECTION BUREAU

On February 26, 2020 the CFPB published a new Truth in Lending Act (“TILA”) – Real Estate Settlement Procedures Act (“RESPA”) Integrated Disclosures FAQs. This document contains questions and answers regarding the TILA-RESPA Integrated Disclosure Rule, also known as the TRID rules.

DEPARTMENT OF DEFENSE

The Department of Defense has finally amended the controversial Question #2 in its interpretation of the Military Lending Act (“MLA”). This interpretive rule was originally published on December 14, 2017. Specifically, the rule dealt with the extension of credit to a covered person when purchasing a motor vehicle or personal property where the credit extended is more than the purchase price of the vehicle or property. This interpretative rule has been rescinded, meaning it is as if the rule was never published. Now creditors must return to the original interpretative rule published on August 26, 2016. Although the 2016 interpretative rule does not specifically address credit insurance products, credit insurance and GAP sales associated with the purchase money vehicle financing in dealer-arranged sales to covered persons no longer triggers a “per-se” loss of the exemption under MLA. Effective February 28, 2020.