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H0784......................................................by STATE AFFAIRS
TITLE LOANS - Adds to existing law relating to title loans to provide a
short title; to define terms; to require licensure; to set forth
requirements applicable to title loan agreements; to provide for
disclosure; to provide for the renewal of title loan agreements; to set
forth default provisions; to prohibit specified actions; and to provide an
exemption.
03/07 House intro - 1st rdg - to printing
03/08 Rpt prt - to Bus
03/14 Rpt out - rec d/p - to 2nd rdg
03/15 2nd rdg - to 3rd rdg
03/16 3rd rdg - PASSED - 66-0-4
AYES -- Anderson, Andrus, Barraclough, Barrett, Bayer, Bedke, Bell,
Bilbao, Black, Block, Boe, Bolz, Brackett, Bradford, Cannon,
Chadderdon, Clark, Collins, Deal, Denney, Edmunson, Ellsworth,
Eskridge, Field(18), Field(23), Garrett, Hart, Harwood, Henbest,
Henderson, Jaquet, Kemp, Lake, LeFavour, Loertscher, Martinez,
Mathews, McGeachin, McKague, Miller, Mitchell, Moyle, Nielsen,
Nonini, Pasley-Stuart, Pence, Raybould, Ring, Ringo, Roberts, Rusche,
Rydalch, Sali, Sayler, Schaefer, Shepherd(2), Shepherd(8), Shirley,
Skippen, Smith(30), Smith(24), Smylie, Stevenson, Trail, Wills, Mr.
Speaker
NAYS -- None
Absent and excused -- Bastian, Crow, Snodgrass, Wood
Floor Sponsor - Black
Title apvd - to Senate
03/17 Senate intro - 1st rdg - to Com/HuRes
03/24 Rpt out - rec d/p - to 2nd rdg
03/27 2nd rdg - to 3rd rdg
03/28 3rd rdg - PASSED - 34-0-1
AYES -- Andreason, Brandt, Broadsword, Bunderson, Burkett(Clark),
Burtenshaw, Cameron, Coiner, Compton, Corder, Darrington, Davis,
Fulcher, Gannon, Geddes, Goedde, Hill, Jorgenson, Kelly, Keough,
Langhorst, Little, Lodge, Malepeai, Marley, McGee, McKenzie, Pearce,
Richardson, Schroeder, Stegner, Stennett, Werk, Williams
NAYS -- None
Absent and excused -- Sweet
Floor Sponsor - Goedde
Title apvd - to House
03/29 To enrol
03/30 Rpt enrol - Sp signed
03/31 Pres signed - To Governor
03/31 Governor signed
Session Law Chapter 323
Effective: 07/01/06
]]]] LEGISLATURE OF THE STATE OF IDAHO ]]]]
Fifty-eighth Legislature Second Regular Session - 2006
IN THE HOUSE OF REPRESENTATIVES
HOUSE BILL NO. 784
BY STATE AFFAIRS COMMITTEE
1 AN ACT
2 RELATING TO TITLE LOANS; AMENDING CHAPTER 46, TITLE 28, IDAHO CODE, BY THE
3 ADDITION OF A NEW PART 5, CHAPTER 46, TITLE 28, IDAHO CODE, TO PROVIDE A
4 SHORT TITLE, TO DEFINE TERMS, TO REQUIRE LICENSURE, TO SET FORTH REQUIRE-
5 MENTS APPLICABLE TO TITLE LOAN AGREEMENTS, TO PROVIDE FOR DISCLOSURE, TO
6 PROVIDE FOR THE RENEWAL OF TITLE LOAN AGREEMENTS, TO SET FORTH DEFAULT
7 PROVISIONS, TO PROHIBIT SPECIFIED ACTIONS AND TO PROVIDE AN EXEMPTION.
8 Be It Enacted by the Legislature of the State of Idaho:
9 SECTION 1. That Chapter 46, Title 28, Idaho Code, be, and the same is
10 hereby amended by the addition thereto of a NEW PART, to be known and desig-
11 nated as Part 5, Chapter 46, Title 28, Idaho Code, and to read as follows:
12 PART 5
13 TITLE LOAN ACT
14 28-46-501. SHORT TITLE. This part shall be known and may be cited as the
15 "Title Loan Act."
16 28-46-502. DEFINITIONS. As used in this part, unless the context other-
17 wise requires:
18 (1) "Title lender" means a regulated lender authorized pursuant to this
19 part to make title loans.
20 (2) "Title loan" means a loan for a consumer purpose that is secured by a
21 nonpurchase money security interest in titled personal property and that is
22 scheduled to be repaid in either a single installment or in multiple
23 installments that are not fully amortized. Title loans are regulated consumer
24 loans and, except as otherwise provided in this part, all provisions of the
25 Idaho credit code relating to regulated consumer loans apply to title loans
26 and to persons engaged in the business of making title loans.
27 (3) "Title loan agreement" means a written agreement whereby a title
28 lender agrees to make a title loan to a debtor, and the debtor agrees to give
29 the title lender a security interest in unencumbered titled personal property
30 owned by the debtor. Except as otherwise provided in this part, all provisions
31 of chapter 9, title 28, Idaho Code, apply to title loans and to persons
32 engaged in the business of making title loans.
33 (4) "Titled personal property" means any motor vehicle, the ownership of
34 which is evidenced and delineated by a state issued certificate of title, but
35 does not include a motor home, mobile home or manufactured home.
36 28-46-503. LICENSE REQUIRED. (1) No person shall engage in the business
37 of making title loans without having first obtained a license from the admin-
38 istrator pursuant to this chapter authorizing the person to make regulated
39 consumer loans.
40 (2) Any title loan made without first having obtained a license is void,
2
1 in which case the person making the loan forfeits the right to collect any
2 moneys, including principal, interest, and any other fee paid by the debtor in
3 connection with the title loan agreement. The person making the title loan
4 shall release its security interest in the titled personal property used as
5 security for the title loan and shall return to the debtor:
6 (a) The certificate of title for such titled personal property;
7 (b) Such titled personal property if the person making the loan took pos-
8 session of such property;
9 (c) The fair market value of such titled personal property if the person
10 making the loan took possession of such property and is not able to return
11 such property; and
12 (d) All principal, interest, and any other fees paid by the debtor.
13 28-46-504. TITLE LOAN AGREEMENTS. (1) Every title lender shall keep a
14 numbered record of each and every title loan agreement executed by the title
15 lender and debtor. Such record, as well as the title loan agreement, shall
16 include the following information:
17 (a) The make, model and year of the titled personal property;
18 (b) The vehicle identification number, or other comparable identification
19 number, along with the license plate number, if applicable, of the titled
20 personal property;
21 (c) The name, residential address and date of birth of the debtor;
22 (d) The date the title loan agreement is executed by the title lender and
23 the debtor; and
24 (e) The maturity date of the title loan agreement.
25 (2) The following information shall also be printed on the title loan
26 agreement:
27 (a) The name and physical address of the title loan office;
28 (b) In not less than twelve (12) point bold type, the name and address of
29 the administrator as well as a telephone number to which consumers may
30 address complaints;
31 (c) The following statement in not less than twelve (12) point bold type
32 and in all capitalized letters:
33 "(1) This loan is not intended to meet long-term financial needs.
34 (2) You should use this loan only to meet short-term cash needs.
35 (3) You will be required to pay additional interest and fees if you
36 renew this loan rather than pay the debt in full when due.
37 (4) This loan may be a higher interest loan. You should consider
38 what other lower cost loans may be available to you.
39 (5) You are placing at risk your continued ownership of the titled
40 personal property you are using as security for this loan.
41 (6) If you default under this loan the title lender may take posses-
42 sion of the titled personal property used as security for this loan
43 and sell the property in the manner provided by law.
44 (7) If you enter into a title loan agreement, you have a legal right
45 of rescission. This means you may cancel your contract at no cost to
46 you by returning the money you borrowed by the next business day
47 after the date of your loan.
48 (8) If you believe that the title lender has violated the provisions
49 of the Idaho Title Loan Act, you have the right to file a written
50 complaint with the Idaho Department of Finance and the Department
51 will investigate your complaint."
52 (d) The statement that "The debtor represents and warrants, to the best
53 of the debtor's knowledge, that the titled personal property is not stolen
54 and has no liens or encumbrances against it, the debtor has the right to
3
1 enter into this transaction and will not apply for a duplicate certificate
2 of title while the title loan agreement is in effect."
3 (3) The debtor shall sign the title loan agreement and shall be provided
4 with a copy of such agreement. The title loan agreement shall also be signed
5 by the title lender or the title lender's employee or agent. If the debtor has
6 been issued a social security number, the title lender shall keep on file the
7 social security number of the debtor.
8 28-46-505. DISCLOSURE. (1) Notwithstanding the provisions of section
9 28-46-103, Idaho Code, or any other law to the contrary, in accordance with
10 the Idaho administrative procedure act, chapter 52, title 67, Idaho Code, the
11 administrator may promulgate rules requiring each title lender to issue a
12 standardized consumer notification and disclosure form in compliance with fed-
13 eral truth-in-lending laws prior to entering into any title loan agreement.
14 The required style, content and method of executing the form may be prescribed
15 by the rule and shall be designed to ensure that the debtor, prior to entering
16 into such agreement, receives and acknowledges an accurate and complete noti-
17 fication and disclosure of the itemized and total amounts of all interest,
18 fees, charges and other costs that will or potentially could be imposed as a
19 result of such agreement.
20 (2) A title lender shall conspicuously post in each licensed location the
21 statements listed in section 28-46-504(2)(c), Idaho Code.
22 28-46-506. RENEWAL OF TITLE LOAN AGREEMENTS. (1) Title loan agreements
23 shall not exceed thirty (30) days in length. However, such agreements may pro-
24 vide for renewals, which may occur automatically, unless one (1) of the fol-
25 lowing has occurred:
26 (a) The debtor has paid all principal and finance charges due in accor-
27 dance with the title loan agreement;
28 (b) The debtor has surrendered possession, title and all other interest
29 in and to the titled personal property to the title lender; or
30 (c) The title lender has notified the debtor in writing that the title
31 loan agreement is not to be renewed.
32 (2) A debtor has the right to cancel the debtor's obligation to make pay-
33 ments under a title loan agreement until the close of the next business day
34 after the day when the debtor signs a title loan agreement if the debtor
35 returns the original check or cash to the location where the loan was origi-
36 nated. For the purpose of this section, "business day" means any day that the
37 title loan office is open for business.
38 (3) Notwithstanding any provision of this part 5 to the contrary, begin-
39 ning with the third renewal or continuation and at each successive renewal or
40 continuation thereafter, the debtor shall be required to make a payment of at
41 least ten percent (10%) of the principal amount of the original title loan in
42 addition to any finance charges that are due. Finance charges due at each suc-
43 cessive renewal or continuation shall be calculated on the outstanding princi-
44 pal balance. Principal payments in excess of the ten percent (10%) required
45 principal reduction shall be credited to the outstanding principal on the day
46 received. If at the maturity of any renewal requiring a principal reduction,
47 the debtor has not made previous principal reductions adequate to satisfy the
48 current required principal reduction, and the debtor cannot repay at least ten
49 percent (10%) of the original principal balance and any outstanding finance
50 charges, the title lender may, but shall not be obligated to, defer any
51 required principal payment until a future date. No further finance charges may
52 accrue on any such principal amount thus deferred.
53 (4) Within fourteen (14) days after a title loan is automatically
4
1 renewed, the title lender shall provide the debtor written notice of the
2 renewal either by personal delivery to the debtor or by deposit in the regular
3 mail to the debtor's residential address listed in the title loan agreement.
4 For the purpose of this section, a renewal is any extension of a title loan
5 for an additional period without any change in the terms of the title loan
6 other than extension of the maturity date and a reduction in principal.
7 28-46-507. DEFAULT. (1) Before exercising any of its rights upon a
8 default by a debtor under a title loan agreement, the title lender shall mail
9 a "Notice to Cure Default" to the debtor at the debtor's last address shown in
10 the title lender's file, notifying the debtor that the debtor has ten (10)
11 days from the date of the notice in which to cure the default.
12 (2) If the debtor does not cure the default within the ten (10) days, the
13 title lender may proceed to exercise its rights under chapter 9, title 28,
14 Idaho Code. There shall be no further finance charges assessed to the debtor
15 after the title lender has obtained possession of the titled personal prop-
16 erty.
17 (3) Upon voluntary surrender of the titled personal property used as
18 security for a title loan, the title lender shall have no obligation to send
19 any "Notice to Cure Default" to the debtor.
20 (4) Title lenders may assess and collect reasonable expenses of collec-
21 tion and enforcement as authorized by chapter 9, title 28, Idaho Code.
22 28-46-508. PROHIBITED ACTIONS. A title lender shall not:
23 (1) Enter into a title loan agreement with a person less than eighteen
24 (18) years of age, or with anyone who appears to be intoxicated;
25 (2) Make any agreement giving the title lender any recourse against the
26 debtor other than the title lender's right to take possession of the titled
27 personal property and certificate of title upon the debtor's default, and to
28 sell or otherwise dispose of the titled personal property in accordance with
29 the provisions of chapter 9, title 28, Idaho Code, except where the debtor
30 prevented repossession of the vehicle, damaged or committed or permitted waste
31 on the vehicle or committed fraud;
32 (3) Enter into a title loan agreement in which the amount of money
33 loaned, when combined with the outstanding balance of other outstanding title
34 loan agreements the debtor has with the same lender secured by any single
35 titled personal property, exceeds the retail value of the titled personal
36 property as determined by common motor vehicle appraisal guides;
37 (4) Accept any waiver, in writing or otherwise, of any right or protec-
38 tion accorded a debtor under this chapter;
39 (5) Fail to exercise reasonable care to protect from loss or damage the
40 certificate of title in the physical possession of the title lender;
41 (6) Purchase titled personal property used as security for a title loan
42 made by the title lender;
43 (7) Enter into a title loan agreement unless the debtor presents a clear
44 title to titled personal property at the time that the loan is made. If the
45 title lender files a lien against such titled personal property without pos-
46 session of a clear title to such property, the resulting lien shall be void;
47 (8) Capitalize or add any accrued interest or fee to the original princi-
48 pal of the title loan agreement during any renewal of the agreement;
49 (9) Require a debtor to provide any additional guaranty as a condition to
50 entering into a title loan agreement;
51 (10) Use any device or agreement, including agreements with affiliated
52 title lenders, with the intent to obtain greater charges than otherwise would
53 be authorized by this part; or
5
1 (11) Violate the provisions of this part or any rule promulgated pursuant
2 thereto.
3 28-46-509. EXEMPTION. The provisions of this part shall not apply to any
4 person licensed or chartered under the laws of any state or of the United
5 States as a bank, savings and loan association, credit union, insurance com-
6 pany, or industrial loan company. The terms "bank," "savings and loan associa-
7 tion," "credit union," "insurance company" and "industrial loan company" shall
8 include employees and agents of such organizations as well as wholly-owned
9 subsidiaries of such organizations, provided that the subsidiary is regularly
10 examined by the chartering state or federal agency for consumer compliance
11 purposes.
STATEMENT OF PURPOSE
RS 16210
This legislation imposes additional regulation on title lenders.
Based on American Legislative Exchange Council (ALEC) model
legislation, it establishes consumer protections by prohibiting
inappropriate lending practices, requiring certain disclosures
and limiting interest accruals on title loans.
FISCAL NOTE
This legislation will have no impact on the general fund.
Contact
Name: Representative Max Black
Phone: (208) 332-1000
STATEMENT OF PURPOSE/FISCAL NOTE H 784