Compliance Alerts

 

 

JANUARY 2019

 

Summary Review of State Changes in 2018             

 

ALABAMA

HB 420 authorized and set requirements for guaranteed asset protection waivers. Effective January 1, 2018.

 

The State Banking Department updated Rule No. 155-2-2-.12, regarding Credit Insurance. Effective June 1, 2018.

 

ARIZONA

HB 2434 was signed by the Governor on March 22, 2018. The bill creates a “regulatory sandbox program” for new and innovative financial products.

Effective July 16, 2018.

 

The Governor approved SB 1043 on April 5, 2018. SB 1043 updates the recording fees charged for certain real estate transactions.

Effective June 30, 2019.

 

SB 1381 was signed by the Governor on April 5, 2018 and relates to the sale of service contracts in Arizona.

 

CALIFORNIA

AB 3163 was signed by the Governor on September 14, 2018 and allows for a $1 fee and $3 transaction fee to be passed on to the consumer for the purposes

of submitting motor vehicle registration and titling transactions. Effective immediately.

 

AB 375 was approved by the Governor on June 28, 2018. The bill enacts the California Consumer Privacy Act of 2018.

Effective January 1, 2020.

 

AB 237 was approved by the Governor on September 30, 2018. The Bill amends the Financial Code and adjusts the parameters under California’s

“Pilot Program” for small loans. Effective January 1, 2019.

 

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. Effective January 1, 2019.

 

CONNECTICUT

Public Act No. 18-173 (HB 5490) was signed by the Governor on June 14, 2018. The Act modifies the maximum annual percentage rates for small loans.

Effective October 1, 2018.

 

COLORADO     

HB 18-1299 was signed by the governor on May 29, 2018. The act defines third-party providers in connection to an electronic registration transaction, lien

transaction, or titling transaction. Effective July 1, 2019.

 

Proposition 111 was a ballot measure overwhelmingly supported by the voters that capped the yearly Annual Percentage Rate at 36% for short term

loans. Effective February 1, 2019.

 

FLORIDA

SB 386 was signed by the Florida Governor on March 19, 2018. The bill amends Florida's Consumer Finance Law. Effective July 1, 2018.

 

SB 920 defines and places certain limits on deferred presentment installment transactions. Effective July 1, 2019.

 

IDAHO

HB 521 / Chapter 116 provides for state regulation of motor vehicle service contracts. Effective July 1, 2018.

 

ILLINOIS

The maximum Document Preparation Fee a dealer can charge in 2018 is $175.94.  Effective January 1, 2019.

 

INDIANA

The Governor signed HB 1063 on March 19. Included in the law are provisions relating to records that must be maintained in relation to the sale of a

motor vehicle. Effective July 1, 2018.

 

HB 1397 broadly addresses financial institutions and modifies various banking, consumer and financial services laws. GAP Agreements may be

entered into, subject to certain restrictions and disclosures. The bill removes the language that requires the price of GAP waivers to be “reasonable.”

Effective July 1, 2018.

 

SB 377 was signed by the Governor on March 13, 2018. This bill adds a provision that allows the Department of Financial Institutions to capture

and monitor transaction level activity relating to small loans regulated under IC 24-4.5-7. Effective July 1, 2018.

 

The Indiana Department of Financial Institutions published guidance for GAP and Debt Cancellation Administrators on April 2, 2018.

Effective July 1, 2018.

 

Indiana published Emergency Rule LSA Document #18-155(E) which implements certain credit, finance, and loan bracket updates,

effective July 1, 2018.

 

In Bulletin 246, the Indiana Insurance Commissioner adjusted credit life and A&H rates effective January 1, 2019.

 

LOUISIANA 

HB 522 / Act 592 was signed by the Louisiana Governor on May 28, 2018. The Act relates to motor vehicle service contracts.

Effective February 1, 2019.

 

MAINE

LD 1506 authorized and set requirements for guaranteed asset protection waivers. Effective January 1, 2018.

 

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.

 

MARYLAND

SB 1068/ Chapter 732 was signed by the governor on May 15, 2018 and creates the Financial Consumer Protection Act of 2018.

The governor signed a similar bill, HB 1634/Chapter 731 on the same day. The Act requires lenders of covered loans to be licensed

in the state. Both laws are effective October 1, 2018.

 

HB 1297 increases the small loan threshold under the Maryland Consumer Loan Law from $6,000 to $25,000. Effective January 1, 2019.

 

MICHIGAN

On February 7, 2018, the Department of Insurance and Financial Services released Bulletin 2018-01-CF, which adjusts the Regulatory

Loan Act Loan Processing Fees. Effective immediately.

 

MINNESOTA

The Minnesota Commerce Department published the periodic adjustment in dollar amounts effective July 1, 2018 through June 30, 2020.

 

MISSISSSIPI       

SB 2929 was approved by the Governor on March 26. The bill clarifies that GAP waivers are not insurance and therefore exempt from

state insurance laws. Effective July 1, 2018.

 

HB 811 was signed by the Governor on March 19, 2018. HB 811 reenacted the Mississippi Credit Availability Act, effective July 1, 2018.

 

NEBRASKA

LB 194 was approved by the governor on April 19, 2018. The bill modifies the Credit Services Organization Act, the Delayed Deposit

Services Licensing Act, and the Nebraska Installment Loan Act. Effective January 1, 2019.

 

NEW HAMPSHIRE

New Hampshire updated Credit Life and A&H rates on January 30, 2018. The rates become effective on February 1, 2018 or at the time of policy renewal. 

 

HB 1687 removes a reference to how interest must be computed based on a 30-day month. Small loan, title loan, or payday lenders may not take a

note or agreement in which there are blanks that are left to be filled in after the loan is made. Effective August 7, 2018.

 

NEW JERSEY

AB 4044 prohibits non-disclosure clauses in any agreement entered into by a consumer for the purchase or lease of a new motor vehicle.

Effective April 6, 2018.

 

SB 2968 / Chapter 308 establishes an electronic lien and title system for motor vehicles in New Jersey. Once implemented, all lienholders, except

those who do not normally engage in the business of financing motor vehicles, will be mandated to use the system within one year.

Effective January 16, 2018.

 

SB 3555 amends R.S.39:3-27 to exempt non-profit organizations in the State that provide transportation services exclusively to persons with

developmental disabilities from registration fees for motor vehicles. Effective January 16, 2018.

 

NEW MEXICO

HB 347 enacted the Installment Loan Fee Limits and Literacy Fund. The bill revised sections of the Small Loan Act, increasing the maximum amount

of the loan to $5,000 and limiting the APR to 175%. Effective January 1, 2018.

 

Bulletin 2017-012 updated the Prima Facie Credit Life and A&H rates for 2018. Effective January 1, 2018.

 

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.

 

NEW YORK

SB 5152 specifies that limitations on assignee liability for retail installment contracts shall be exclusive of any reasonable costs or attorney's fees a court

may award.  Effective January 1, 2018.

 

NORTH CAROLINA     

HB 347 was enacted after overriding the Governor’s veto. The bill specifically addresses balloon payments when financing motorcycles.

Effective December 1, 2018.

 

SB 411 expands the required use of the electronic lien system implemented by the Division of Motor Vehicles. Effective June 22, 2018.

 

OHIO

HB 199 modifies the Ohio Mortgage Loan Law and creates the Ohio Residential Mortgage Lending Act. Effective March 23, 2018.

 

HB 123, signed by the Governor on July 30, 2018, specifically addresses Small Loans, Short-term Loans, and Second Mortgage

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

 

OKLAHOMA

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. Effective November 1, 2018.

 

The Department of Consumer Credit published changes in the dollar amounts for retail installment sales and small loans. Effective July 1, 2018.

 

OREGON

SB 338 clarifies the laws that govern guaranteed asset protection waivers. Effective January 1, 2018.

 

SOUTH CAROLINA

South Carolina Department of Insurance released Order 2017-03 which confirmed Prima Facie Credit A&H rates for 2018 will remain

unchanged. Effective January 1, 2018.

 

The Department of Consumer Affairs released its biannual dollar bracket adjustment effective from July 1, 2018 through June 30, 2020.

Among the dollar bracket adjustments are consumer credit sale, consumer lease, and consumer loans.

 

The default charges for retail installment sales will change to the greater of 5% of the unpaid installment, with a maximum of $18.50;

or 40% of $7.40. Effective July 1, 2018.

 

On October 31, 2018, the South Carolina Department of Insurance published Order 2018-06 confirming Prima Facie Credit A&H rates

for 2019. Effective January 1, 2019.

 

SOUTH DAKOTA

Signed by the Governor of South Dakota on March 1, 2018, HB 1082 amends the definition of a “business of lending money.”

Effective July 1, 2018.

 

TENNESSEE

HB 1944 amends provisions of the Tennessee Code related to Tennessee Industrial Loan and Thrift Companies. Effective March 23, 2018.

 

TEXAS

The dollar amount brackets and ceilings subject to adjustment in the Texas Financial Code increased for Consumer Loans and Retail

Installment Sales. Effective July 1, 2018.

 

VIRGINIA

On August 22, 2018 the Commonwealth of Virginia’s Bureau of Insurance proposed adjusted prima facie rates and these were adopted

for a three-year period. Effective January 1, 2019.

 

WASHINGTON D.C.

The Washington D.C. City Council passed a bill which establishes rules for the administration, issuance, sale, registration, and regulation

of service contracts. Effective May 22, 2019.

 

WASHINGTON

HB 1056 provides protections for military service members in Washington. The bill expands the definition to include an active member who

is either stationed in or a resident of Washington state. Effective June 7, 2018.

 

WEST VIRGINIA

HB 4186 was sent to the Governor on March 10, 2018 and became law without the Governor's signature on March 28. The bill clarifies

that GAP Waivers in West Virginia are not insurance. Effective June 8, 2018.

 

WISCONSIN

A July 21, 2017 Bulletin updated the Prima Facie Credit Life and A&H insurance rates. Effective January 1, 2018.

 

WI AB 663 / Act 161 was signed by the Governor on March 28. The bill provides that GAP waivers may be offered or sold in connection

with a credit sale or lease of a vehicle. Effective September 1, 2018.

 

 

 

Summary Review of Federal Changes in 2018

 

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 2019 the exemption threshold amount for Regulation M and Z is increased from $55,800 to $57,200.

Effective January 1, 2019.

 

HOEPA and ATR/QM

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