Compliance Alerts

August/September 2019

 

Effective State Changes  

 

FLORIDA

On August 15, 2019 Florida released credit life and disability rules 690-163.009 and 690-163.011. 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. Additionally, a new rule was implemented regarding rate deviation requests. The Consumer Credit Industry Association (“CCIA”), a lobbying and advocacy group for credit insurance institutions, asked the Florida Office of Insurance Regulation (“FOIR”) for the date when the new rates were to be implemented. Although the FOIR provided no “effective date”, CCIA has counseled its members and believes the prudent course is for insurance companies to file for the new prima facie rates in an expeditious manner.

 

ILLINOIS

Governor John Carney signed Senate Bill 1758 into law on August 23, 2019. This bill makes changes to the Consumer Installment Loan Act by defining “substantially equal installment" as “a last regularly scheduled payment that may be less than, but not more than 5% larger than the previous scheduled payments…” Effective immediately.

Senate Bill 1624 was signed into law on July 9, 2019. The act made changes to the Personal Information Protection Act by putting in place new reporting requirements following a breach of personal information that affects 500 or more residents of the State of Illinois. Effective January 1, 2020.

 

NEW HAMPSHIRE

New Hampshire enacted Senate Bill 194 on August 2, 2019 which created a new Insurance Data Security Law. Effective January 1, 2020.

 

NEW JERSEY

Assembly Bill 4420 became law on August 8, 2019. It modifies certain fees charged by check casher licensees. Check Cashers may charge a fee of up to 3% of the face amount of the check on checks that are payable to an entity or are in excess of $2,500. Effective immediately.

Senate Bill 1149 created an Office of the Student Loan Ombudsman within the New Jersey Department of Banking and Insurance. This bill regulates student loan servicers and requires those entities to register with the National Mortgage Licensing System and Registry. Effective 120 days after enactment.

 

NEW YORK

On July 25, 2019 Governor Andrew Cuomo signed the SHIELD Act (SB5575) into law. The “Stop Hacks and Improve Electronic Data Security Act” amends New York’s current data breach notification law by imposing more expansive data security and data breach notification requirements. Effective March 21, 2020.

Governor Andrew Cuomo signed NY SB 4019 on September 5, 2019. The bill requires that a retail lessee shall not be financially liable for charges when the early termination of a motor vehicle retail lease agreement occurs because he or she has passed away before the lease’s conclusion.

NY AB 7080 amended current law to include keys or key fobs as falling under the definition of items covered under Service Contracts for motor vehicle repairs. Effective immediately.

 

NORTH CAROLINA

Senate Bill 385 was signed by Governor Roy Cooper on July 26, 2019. The law primarily concerns motor vehicle dealer licensing requirements and fees and referral requirements. Additionally, the bill establishes that a motor vehicle dealer that does not market or extend to a covered borrower a loan or credit transaction covered by specified federal law is not in violation of North Carolina state law (which prohibits private discrimination against military personnel). This provision is retroactively extended by law to October 3, 2016. This bill defines a “covered borrower” by cross-reference to federal law. Effective July 26, 2019.

On July 25, 2019 Senate Bill 420 was approved by the governor. The North Carolina Servicemembers Civil Relief Act codifies into state law many provisions of the federal Servicemembers Civil Relief Act. Additionally, servicemembers may terminate some service contracts when called into duty and may have the extension of certain lease agreements based on that status. Effective July 25, 2019.

 

OHIO

The Ohio Department of Insurance has issued a memorandum revising prima facie credit insurance rates effective January 1, 2020. Credit Life rates remain unchanged for 12 months at $0.627 per $1000 per month. The Credit Disability rates will decrease 9.7%. for 12 months at $1.19 per $100 for the 14-day retroactive plan

Credit Life Premium Rates

Single Decreasing Life Coverage                                       $0.41/$100/ @ 12 Months

Single Level Life Coverage                                                  $0.75/$100/ @ 12 Months

Joint Decreasing Life Coverage                                         $0.71/$100/ @ 12 Months

Joint Level Life Coverage                                                    $1.31/$100/ @ 12 Months

*Joint life rates are 175% of corresponding single life rates.

Credit Disability Rates

14-Day Retroactive                               $1.20 per month per $100 of coverage @ 12 Months

14-Day Elimination                               $1.04 per month per $100 of coverage @ 12 Months

30-Day Retroactive                               $0.90 per month per $100 of coverage @ 12 Months

30-Day Elimination                               $0.63 per month per $100 of coverage @ 12 Months

 

RHODE ISLAND

Following a national trend, Rhode Island has enacted a Student Loan Bill of Rights. House Bill 5936 gives guidance to the Attorney General’s Consumer Protection Unit and other entities to review complaints of student loan borrowers. Additionally, it sets out the duties and responsibilities of loan servicers. Effective immediately.

 

SOUTH CAROLINA

On September 13, 2019, the South Carolina Department of Insurance published orders 2019-04, 2019-05, and 2019-06 confirming Prima Facie Credit A&H and Credit Property rates for 2020. The A&H rates for insurance sold in conjunction with consumer credit transactions in 2020 will remain unchanged from their current rates in 2019. 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 2019-04, 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, 2020.

 

 

Effective Federal Changes

 

CONSUMER FINANCIAL PROTECTION BUREAU

Specific dollar threshold adjustments were announced on August 1, 2019 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, 2020.

HOEPA Annual Threshold Adjustments:

  • The adjusted total amount of the loan threshold will be $21,980, up from $21,549
  • The adjusted points and fees trigger will be $1,099, up from $1,077

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 $13,737
  • $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
  • 3% of total loan amount for loans greater than or equal to $109,898

 

Update Reminders

 

NEW JERSEY

Governor Phil Murphy signed Senate Bill 2994 on July 19. The act requires GAP waivers to be cancellable and requires a pro rata refund of the purchase price following the cancellation of such waiver. Effective October 17, 2019.

 

NORTH CAROLINA

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.

 

TEXAS

HB 3855 affects consumer loans made under Section 342.201 of the Finance Code. The bill adds language that interest must be charged using the scheduled installment earnings method or the true daily earnings method.  Effective September 1, 2019.