Compliance Alerts

Effective State Changes



California AB 237 was approved by the Governor on September 30, 2018. The Bill amends sections 22365, 22370, 22371, 22379, and 22380 of the Financial Code and adjusts the parameters under California’s “Pilot Program” for small loans.

Under the Bill, the loan limit is increased from $2,500 to $7,500. The applicable interest rate structure remains the same:

* The lesser of 36% or the sum of 32.75% plus the United States prime lending rate on that portion of the unpaid principal balance not in excess of, $1,000.

* The lesser of 35% or the sum of 28.75% plus the United States prime lending rate on that portion of the unpaid principal balance of the loan in excess of $1,000, but less than $7,500.

For loans above $2,500, the loan payment amount is capped at 36% of the borrower’s monthly income. The Lender must reduce the interest rate of subsequent loans under certain conditions.

The Bill sets maximum terms based on the principal balance at origination and specifically allows for an Administrative Fee and Delinquency fees. Effective January 1, 2019.

AB 3163 was signed by the Governor on September 14, 2018. Previously the law allowed a $3 transaction fee to be passed on to the customer and an additional $1 transaction fee for the purposes of submitting motor vehicle registration and titling transactions that could not be passed on to the customer by private industry partners. This bill deletes the prohibition on passing on the allowed additional $1 transaction fee to the customer. The $1 fee may now be passed on to the consumer in addition to the $3 transaction fee. Effective immediately.

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. The Bill is intended to build on the SCRA. Among the provisions, the bill:

* Extends certain protections related to the collection of student loan debt to one year after the period of military service; and includes student loans to the list of specified obligations that require the option to defer payments.

* Allows a service member to terminate a lease of a motor vehicle, under certain conditions.

Effective January 1, 2019.


Maine 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. The GAP Waiver must have a cancellation period and in the event of such a cancellation, there must be a pro-rata refund. The Act specifies GAP Waivers are not insurance.


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. It clarifies that the OSI asserts regulatory authority over GAP Insurance but not GAP Waivers.


Specific dollar threshold adjustments were announced on August 27, 2018 through the Bureau of Consumer Financial Protection. The BCFP 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, 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


We reported in the June 2018 Newsletter that Public Act No. 18-173 (HB 5490) modified the maximum annual percentage rates for small loans. Effective October 1, 2018.

* Small loans under $5,000: the maximum APR is the lesser of 36% or the maximum APR permitted with respect to credit extended under the Military Lending Act (currently 36%).

* Small loans between $5,000 and $15,000: the maximum APR is 25%.


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. The convenience fee shall not exceed the lesser of actual cost incurred by the lender for accepting and processing payments by electronic means, or 4%. Effective November 1, 2018.