Compliance Alerts

Effective State Changes

 

CALIFORNIA

California Assembly Bill No. 2521 amends Section 800 of the Military and Veterans Code. The bill allows a reservist called to active duty to defer payments on certain financial obligations for the lesser of either the period of active duty plus 60 calendar days or 180 days. The bill removes the requirement on the service member to provide a signed letter, under penalty of perjury, and instead requires the service member to deliver a written request. Effective January 1, 2019.

OHIO

Ohio House Bill 123, signed by the Governor on July 30, 2018, specifically addresses Small Loans (§§ 1321.01-1321.19), Short-term Loans (§§ 1321.35-1321.48), and Second Mortgage Loans (§§ 1321.51-1321.60). 

Under the Act, a Small Loans Licensee shall not make a loan where either (1) the loan is $1,000 or less, or (2) the loan has a duration of one year or less.

A Short-term Loan Licensee must meet the following conditions:

  • The total loan amount doesn’t exceed $1,000 (up from $500 previously).
  • The maximum duration is one year.
  • The minimum duration may be less than 91 days if the total monthly payment on the loan does not exceed the greater of 6% of the borrower’s gross month income or 7% of the borrowers verified net monthly income.
  • The loan must be precomputed and payable in substantially equal installments.
  • The borrower must be able to rescind or cancel the loan within three business days.
  • For loans greater than 91 days, the licensee must recommend the length of the loan based on the borrower’s monthly income.
  • The total amount of fees and charges (excluding the check-collection charge, the check-cashing fee, and refinanced interest charges) may not exceed 60% of the original contracted loan amount.

The following additional or revised fees are allowed:

  • Interest not exceeding 28%.
  • A monthly maintenance fee not exceeding the lesser of 10% of the loan amount or $30 (unless a military exemption applies).
  • If the loan amount is $500 or more, a loan origination charge of 2% of the originally contracted amount.
  • A check-cashing fee not exceeding $10.

A Short-term Loan Licensee is prohibited from:

  • Charging for credit insurance premiums; ancillary products; or additional fees, interest or charges.
  • Making a short-term loan to the borrower if there exists an outstanding loan between the borrower and the licensee.
  • Making a short-term loan if the loan will result in a total outstanding principal of more than $2,500 in short term loans made by licensee to the borrower at any one time.

The Act also includes provisions regarding: fees included or excluded in the interest or APR calculations, statements that must be given to the borrower, refinancing, refunding for prepayment, restrictions on contacting the borrower, and verifying the borrower’s income.

Under the Act, Second Mortgage Loans may not (1) be in the amount of $1,000 or less, or (2) have a duration of one year or less.

Effective October 28, 2018, but only applicable to loans made after April 26, 2019.