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Colorado Department of Revenue issues emergency regulations regarding motor vehicle sales
On May 1, 2020, the Colorado Department of Revenue, Motor Vehicle Dealer Board, issued emergency regulations permitting licensed motor vehicle dealers to complete sales transactions of motor vehicles during Covid-19, provided that certain conditions are met.
CFPB: Substantial decline in credit applications in March
On May 1, the CFPB released a report examining the early effects of the Covid-19 pandemic on credit applications in March, concluding there was a substantial decline compared to previous years. Specifically, the report compared “hard inquiry” volume from credit checks for auto loans, mortgages, and credit cards by lenders during the month of March with the same data from previous years. Among other things, the report notes that auto loan inquiries dropped by 52 percent, new mortgage inquiries dropped by 27 percent, and credit card inquiries declined by 40 percent, as compared to usual data patterns from previous years. The report noted variations based on credit score and geography. The drops in inquiries were more pronounced for consumers with higher credit scores, and in states in the Northeast and California. The report noted a strong correlation between states with a higher Covid-19 case rate and the significance of the drop in auto loan and new mortgage inquiries. A similar correlation was also found between states with a larger share of workers entering unemployment and a drop in the same credit inquires.
Virginia caps interest and fees charged under short-term loans
On April 22, the Virginia legislature enacted HB 789, which amends certain provisions of the Virginia Consumer Protection Act (VCPA) related to consumer lending. Specifically, the provisions increase the maximum short-term loan from $500 to $2,500, and sets the duration of these loans to a minimum of four months and a maximum of 24 months, subject to exceptions. Interest and fees that may be charged on a short-term loan are capped at an annual rate of 36 percent, plus a maintenance fee. In addition, licensed lenders are required to make a reasonable attempt to verify a borrower’s eligibility and may not collect fees and charges that exceed 50 percent of the original loan amount if such amount is $1,500 or less, or 60 percent of the original loan amount if the original amount is greater than $1,500. Additional amendments include provisions that (i) update the requirements for motor vehicle title loans, including prohibiting loans to borrowers with outstanding title loans, and prohibiting licensees from collecting or receiving credit insurance premiums and charges for ancillary products, among other things; (ii) make a violation of the bill’s provisions a prohibited practice subject to enforcement under the VCPA; (iii) allow licensed lenders to use the services of access partners, subject to certain conditions; (iv) provide that installment loans must be between $300 and $35,000 to be paid in substantially equal installment payments, with terms of no fewer than six and no more than 120 months; and (iv) outline short-term loan advertising requirements. Persons required to be licensed under these provisions must apply for a license on or before October 1, 2020. Licenses will take effect January 1, 2021 for those issued by the State Corporation Commission prior to this date.
Florida expands motor vehicle retail installment initial payment rule
On April 17, the commissioner of the Florida Office of Financial Regulation issued Emergency Order 2020-03, which temporarily expands the motor vehicle retail installment initial pay rule. The order permits a motor vehicle retail installment seller licensed under Chapter 520 of the Florida Statues to allow the first payment of a motor vehicle retail installment contract to be scheduled up to 90 days from the date of the loan.
New Mexico regulator halts repossessions during pandemic
On April 14, the New Mexico Public Regulation Commission provided notice that towing services for purpose of automobile repossessions are deemed non-essential by the governor. The notice effectively bans repossession for the duration of the Covid-19 emergency.
Alaska calls for moratorium on foreclosures and evictions as part of a broader state bill
On April 10, Alaska enacted into law legislation that extended a moratorium on foreclosures, evictions, and repossessions, and also called for forbearance plans pertaining to specific state loans. The bill extended the governor’s March 11 executive order declaring a state of emergency and imposed temporary changes to state laws and regulations in response to the Covid-19 crisis. Legislative action was required to extend the governor’s executive order beyond 30 days.
California counties announce waiver of penalties and charges for late filing of property taxes for inability to pay caused by Covid-19
On April 4, the California State Association of Counties and the California Association of County Treasurers and Tax Collectors announced that California counties will use their existing authority to cancel penalties and other charges for homeowners, small businesses, and other property owners that are unable to pay their property taxes due to circumstances caused by Covid-19 on a case-by-case basis. The statement emphasizes that property owners who can pay or have not been directly affected by Covid-19 should still pay on time to keep critical government services running.
Maryland issues executive order suspending repossessions, foreclosures, and evictions, and providing relief to commercial banks and credit unions
On April 3, the Maryland governor issued an executive order prohibiting repossessions of an automobile, truck, or chattel home by a creditor, suspending the initiation of residential foreclosures, and prohibiting residential and commercial evictions. The order also allows the Commissioner of Financial Regulation to, upon the request of a state-chartered or credit union, suspend provisions of the Maryland Code to allow such institutions to exceed statutory lending limits if the commissioner determines that doing so would not reasonably be expected to impair the safety or soundness of the institution.
Illinois prohibits certain vehicle repossessions
On March 28, the Illinois governor issued an executive order suspending certain provisions of Illinois law regarding the repossession or usability of vehicles. However, the executive order does not relieve any individual of the obligation to make payments or comply with any other obligation that an individual may have under a loan agreement or otherwise.
Texas Office of Consumer Credit Commissioner issues bulletins regarding Covid-19 to regulated lenders, credit access businesses, tax lenders, and motor vehicle sales finance licensees
On March 26, the Texas Office of Consumer Credit Commissioner (OCCC) issued four bulletins directed at regulated lenders, credit access businesses, property tax lenders, and motor vehicle sales finance licensees in light of Covid-19. The bulletins urge these entities to work with borrowers during the crisis, including through taking the following measures:
- Increasing communication with borrowers regarding Covid-19.
- Working out modifications with borrowers to help ensure successful repayment, including deferred or partial payments, which would avoid delinquencies and negative credit reporting.
- Waiving certain fees or charges (e.g., late charges, additional finance charges, deferment charges, nonsufficient fund fees) during the disaster declaration.
- Suspending charging off accounts.
- Suspending repossession of vehicles, repossessions of collateral, foreclosure of real property, as applicable
The bulletins also provide guidance on the use of electronic signatures, which the bulletins note are generally allowed under Texas and federal law. The bulletins also provide that the OCCC will not take enforcement actions against regulated lenders, credit access businesses, property tax lenders, or motor vehicle sales finance licensees that conduct business activities from unlicensed locations, if conducted in accordance with certain data security, safe record keeping, and protection of personal information requirements set forth in the bulletins.