DECEMBER 2019—JANUARY 2020

Review of State Changes Effective in 2019

 

ARIZONA          

HB 2674 clarifies that Guaranteed Asset Protection Waivers are not insurance. Effective 90 days after sine die adjournment.

ARKANSAS 

HB 1672 was approved by the Governor on April 8, 2019. The bill specifies that GAP waivers are not insurance. Effective July 23, 2019.

DELAWARE     

House Bill 106 codifies existing legal practice which allows the Department of Justice to regulate service contracts and product warranties. Effective June 26, 2019.

 

FLORIDA                       

On August 15, 2019 Florida released credit life and disability rules. The new rates for credit disability changed for the first time in 10 years and appear to decrease as much as 20% from current rates. Effective August 15, 2019.

 

GEORGIA                         

SB 122 was signed on May 6, 2019. The bill addresses privacy requirements related to the purchase or lease of a motor vehicle. Effective July 1, 2019.

 

HAWAII                            

House Bill 154 clarifies the scope of motor vehicle service contracts subject to regulation by the Department of Insurance. Effective in part on July 1, 2019.

 

ILLINOIS                           

Senate Bill 1758 makes changes to the Consumer Installment Loan Act by defining “substantially equal installment payments.” Effective August 23, 2019.

 

INDIANA              

The Department of State Revenue published Information Bulletin #28S regarding taxation of documentation fees in January 2019. Effective April 2, 2019.

HB 1136 amends the Indiana Uniform Consumer Credit Code and addresses the allowable delinquency charges. The bill applies to consumer credit sales (§24-4.5-2-203.5) and consumer loans (§24-4.5-3-203.5). Effective July 1, 2019.

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

 

IOWA    

HF 260 raises the threshold to a principal balance of $30,000 under the Superintendent's authority to regulate the interest charge. Effective July 1, 2019.

The Governor signed SF 619 on May 16, 2019. The Act modifies provisions related to service contract providers. Effective May 16, 2019.

 

KANSAS                           

 The Office of the State Bank Commissioner published an Administrative Interpretation regarding GAP waivers. Provisions effective on or after May 15, 2019.

 

KENTUCKY 

House Bill 285 applies to consumer loan companies. Rates for supervised lending did not change, but HB 285 created a new loan processing fee. Effective 90 days after the adjournment of the legislative session.

Regulation 174143r places restrictions on deferred deposit transactions.

 

LOUISIANA         

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

 

MARYLAND     

In 2018, Maryland established the Maryland Financial Consumer Protection Commission. The Commission ceased operations on June 30, 2019.

 

MASSACHUSETTS        

HB 4086 was signed into law on January 10, 2019 and establishes and modifies certain laws regarding consumer financial and credit information.

 

MICHIGAN

On December 18, 2018, Governor Snyder approved HB 6498. The bill is known as the “Motor Vehicle Franchise Act.” Effective March 28, 2019.

 

MINNESOTA    

The Minnesota Department of Commerce published guidance requiring that a company that purchases retail installment contracts from Minnesota dealers must hold a sales finance company license. Effective for contracts executed after July 1, 2019.

 

MISSISSSIPI 

House Bill 925 revises the definition of a vehicle service contract and defines road hazards subject to those contracts. Effective July 1, 2019.

 

NEVADA 

SB 201 aligns the state code with the federal Military Lending Act. Effective October 1, 2019, with other portions of the bill effective July 1, 2019 or July 1, 2020.

 

NEW JERSEY 

Senate Bill 2994 requires GAP waivers to be cancellable and requires a pro rata refund of the purchase price. Effective October 17, 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. 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. Effective July 1, 2019.

SB 350 was signed by the Governor on April 4, 2019. The bill amends definitions related to service contracts. Effective 90 days after adjournment of the legislature.

 

NEW YORK

NY SB 4019 requires that a retail lessee shall not be financially liable for charges because he or she has passed away before the lease's conclusion. Passed September 5, 2019.

NY AB 7080 amended current law to include keys or key fobs as falling under the definition of items covered under Service Contracts. Effective September 6, 2019

 

NORTH CAROLINA 

SB 162 modifies the origination fee for a loan or extension of credit not secured by real property. 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. Effective April 1, 2019.

Senate Bill 385 was enacted on July 26, 2019. The law primarily concerns motor vehicle dealer licensing requirements. Effective July 26, 2019

North Carolina Servicemembers Civil Relief Act codifies into state law many provisions of the federal Servicemembers Civil Relief Act. Effective July 25, 2019

On July 5, 2019, Senate Bill 529 became law in North Carolina. This legislation changes the processing fee for a returned check from $25 to $35. Effective October 1, 2019.

 

NORTH DAKOTA 

House Bill 1181 codifies that GAP Waiver agreements can be sold in North Dakota and are exempt from insurance laws. Effective March 21, 2019.

HB 1195 creates contract requirements applicable to service contract providers. Effective on contracts entered into 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 for Retail Installment Sales under § 2-201. For loans subject to § 3-508(A), rates remain the same and the § 3-508(B) rates and brackets were updated on July1, 2019.

 

PENNSYLVANIA

The Pennsylvania Dept. of Banking and Securities released a comment letter clarifying the conditions for the offer of a GAP product. Effective January 31, 2019.

 

TEXAS

HB 3855 affects consumer loans made under Section 342.201 of the Finance Code. Effective September 1, 2019.

Effective July 1, 2019, the dollar brackets and ceilings subject to adjustment in the Texas Financial Code will increase for Consumer Loans and Retail Installment Sales.

 

UTAH  

Governor Gary Herbert signed House Bill 378 on March 25, 2019 creating a financial technology regulatory sandbox. Enacted March 25, 2019.

 

VIRGINIA          

House Bill 2600 was signed on March 8, 2019. The bill is meant to crack down on unsolicited telemarketing calls. Effective July 1, 2019.

Signed by the governor on March 26, 2019, a new law applies to GAP Waivers which are legal agreements and not considered insurance. Effective July 1, 2019.

SB 1325 establishes requirements for offering GAP Waivers and includes provisions relating to disclosures, cancellation, and refunds. Effective July 1, 2019.

 

WASHINGTON D.C.      

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

 

WEST VIRGINIA

House Bill 3143 alters the rate structure of regulated consumer lenders under the Consumer Credit and Protection Act. Effective July 1, 2019.

 

Review of State Changes Effective in 2020

 

CALIFORNIA   

AB 539 amends the California Financing Law. Once this bill goes into effect, a loan with a principal amount of $2,500 to $10,000 may receive charge on 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.

 

HAWAII                            

Senate Bill 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.

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

 

NEW YORK 

On July 25, 2019 Governor Andrew Cuomo signed the SHIELD Act amending New York's current data breach notification law. Effective March 21, 2020.

 

OHIO

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

 

OKLAHOMA

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

 

RHODE ISLAND

House Bill 5674 defines service contracts and clarifies that service contracts are not insurance and not subject to the insurance code. Effective January 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.

 

WYOMING

Wyoming's Governor Mark Gordon signed HB 57 on February 19, 2019. This bill creates a financial technology sandbox. Effective January 1, 2020.

 

 

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 2020 the exemption threshold amount for Regulation M and Z is increased from $57,200 to $58,300. Effective January 1, 2020.

 

HOEPA and ATR/QM

Specific dollar threshold adjustments were announced on August 1, 2019 through the Consumer Protection Financial Bureau. HOEPA Annual Threshold Adjustments will be $21,980, up from $21,549. The adjusted points and fees trigger will be $1,099, up from $1,077. The ATR/QM Threshold Adjustments were also reported in our newsletter:

• 8% of total loan amount for loans less than $13,737
• $1,099 for loans greater than or equal to $13,737 but less than $21,980
• 5% of total loan amount for loans greater than or equal to $21,980 but less than $65,939
• $3,297 for loans greater than or equal to $65,939 but less than $109,898

Effective January 1, 2020.