Compliance Alerts

April/May 2020

 

Effective State Changes 

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.

 

 

Effective Federal Changes 

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.