HB 1109

1
A bill to be entitled
2An act relating to title loan lenders; amending s.
3494.00797, F.S.; including title loan lenders within a
4prohibition against counties and municipalities regulating
5certain entities subject to the jurisdiction of the Office
6of Financial Regulation of the Financial Services
7Commission; amending s. 537.008, F.S.; specifying
8information to be printed in title loan agreements;
9amending s. 537.011, F.S.; revising maximum interest rates
10chargeable on title loans; providing alternative
11requirements for title loans made to certain military
12personnel; providing limitations; requiring the commission
13to establish rules for rates; providing payment
14requirements for title loan borrowers; providing interest
15and fee calculation methodologies; providing criteria and
16limitations for deferring required principal payments;
17amending s. 537.012, F.S.; providing for tolling certain
18title loan payment time requirements for certain military
19personnel; amending s. 537.013, F.S.; specifying an
20additional prohibited activity by a title loan lender;
21prohibiting certain activities by a title loan lender
22relating to military personnel; providing penalties;
23creating s. 537.019, F.S.; prohibiting title loan lenders
24from engaging in certain business activities; repealing s.
25537.018, F.S., relating to preserving authority for more
26restrictive county or municipal ordinances; providing an
27effective date.
28
29Be It Enacted by the Legislature of the State of Florida:
30
31     Section 1.  Subsection (1) of section 494.00797, Florida
32Statutes, is amended to read:
33     494.00797  General rule.--All counties and municipalities
34of this state are prohibited from enacting and enforcing
35ordinances, resolutions, and rules regulating financial or
36lending activities, including ordinances, resolutions, and rules
37disqualifying persons from doing business with a city, county,
38or municipality based upon lending interest rates or imposing
39reporting requirements or any other obligations upon persons
40regarding financial services or lending practices of persons or
41entities, and any subsidiaries or affiliates thereof, who:
42     (1)  Are subject to the jurisdiction of the office,
43including for activities subject to this chapter, except
44entities licensed under s. 537.004;
45
46Proof of noncompliance with this act can be used by a city,
47county, or municipality of this state to disqualify a vendor or
48contractor from doing business with a city, county, or
49municipality of this state.
50     Section 2.  Paragraph (c) of subsection (2) of section
51537.008, Florida Statutes, is amended to read:
52     537.008  Title loan agreement.--
53     (2)  The following information shall also be printed on all
54title loan agreements:
55     (c)1.  The following statement in not less than 12-point
56type that:
57     a.1.  If the borrower fails to repay the full amount of the
58title loan on or before the end of the maturity date or any
59extension of the maturity date and fails to make a payment on
60the title loan within 30 days after the end of the maturity date
61or any extension of the maturity date, whichever is later, the
62title loan lender may take possession of the borrower's motor
63vehicle and sell the vehicle in the manner provided by law. If
64the vehicle is sold, the borrower is entitled to any proceeds of
65the sale in excess of the amount owed on the title loan and the
66reasonable expenses of repossession and sale.
67     b.2.  If the title loan agreement is lost, destroyed, or
68stolen, the borrower should immediately so advise the issuing
69title loan lender in writing.
70     2.  The following statements in not less than 14-point bold
71type:
72     a.  This loan is not intended to meet long-term financial
73needs.
74     b.  You should use this loan only to meet short-term cash
75needs.
76     c.  You will be required to pay additional interest and
77fees if you renew this loan rather than pay the debt in full
78when due.
79     d.  This loan is a higher interest loan. You should
80consider lower cost loans which may be available to you.
81     e.  You are placing at risk your continued ownership of the
82personal property the title for which you are pledging for this
83loan.
84     f.  If you fail to repay the full amount of this loan on or
85before the end of the maturity date or renewal of the loan, the
86title pledge lender may take possession of the property the
87title for which is pledged and sell the property in the manner
88provided by law.
89     g.  If you enter into a title pledge agreement, you have a
90legal right of rescission. This means you may cancel your
91contract at no cost to you by returning the money you borrowed
92by the next business day after the date of your loan.
93
94All owners of the titled personal property must sign the title
95loan agreement.
96     Section 3.  Subsections (1) and (2) of section 537.011,
97Florida Statutes, are amended, and subsections (6) and (7) are
98added to that section, to read:
99     537.011  Title loan charges.--
100     (1)  Except as provided in paragraph (6)(a), a title loan
101lender may charge a maximum interest rate of 22 30 percent per
102month annum computed on the first $2,000 of the principal
103amount, 20 24 percent per month annum on that part of the
104principal amount exceeding $2,000 and not exceeding $3,000, and
10518 percent per month annum on that part of the principal amount
106exceeding $3,000. The original principal amount is the same
107amount as the amount financed, as defined by the federal Truth
108in Lending Act and Regulation Z of the Board of Governors of the
109Federal Reserve System. In determining compliance with the
110statutory maximum interest, the computations must be simple
111interest and not add-on interest or any other computations. When
112two or more interest rates are to be applied to the principal
113amount, the lender may charge interest at that single monthly
114annual percentage rate which, if applied according to the
115actuarial method to each of the scheduled periodic balances of
116principal, would produce at maturity the same total amount of
117interest as would result from the application of the two or more
118rates otherwise permitted, based upon the assumption that all
119payments are made as agreed.
120     (2)  The annual percentage rate that may be charged for a
121title loan may equal, but not exceed, the annual percentage rate
122that must be computed and disclosed as required by the federal
123Truth in Lending Act and Regulation Z of the Board of Governors
124of the Federal Reserve System. The maximum annual percentage
125rate of interest that may be charged is 12 times the maximum
126monthly rate, and the maximum monthly rate must be computed on
127the basis of one-twelfth of the annual rate for each full month.
128The commission shall establish by rule the rate for each day in
129a fraction of a month when the period for which the charge is
130computed is more or less than 1 month.
131     (6)(a)  The title loan lender shall determine whether the
132borrower is a member of the military services of the United
133States. If the borrower is a member of the military services of
134the United States or the spouse of a member of the military
135services of the United States, a title loan lender may charge a
136maximum interest rate of 30 percent per annum computed on the
137first $2,000 of the original principal amount, 24 percent per
138annum on that part of the original principal amount exceeding
139$2,000 and not exceeding $3,000, and 18 percent per annum on
140that part of the original principal amount exceeding $3,000. The
141original principal amount is the same amount as the amount
142financed, as defined by the federal Truth in Lending Act and
143Regulation Z of the Board of Governors of the Federal Reserve
144System. In determining compliance with the maximum interest
145specified by this subsection, the computations must be simple
146interest. Add-on interest or any other computations may not be
147used. When two or more interest rates are to be applied to the
148original principal amount, the lender may charge interest at
149that single annual percentage rate which, if applied according
150to the actuarial method to each of the scheduled periodic
151balances of principal, would produce at maturity the same total
152amount of interest as would result from the application of the
153two or more rates otherwise permitted, based upon the assumption
154that all payments are made as agreed.
155     (b)  The annual percentage rate that may be charged for a
156title loan to a member of the military services of the United
157States or the spouse of a member of the military services of the
158United States may equal, but not exceed, the annual percentage
159rate that must be computed and disclosed as required by the
160federal Truth in Lending Act and Regulation Z of the Board of
161Governors of the Federal Reserve System. The maximum annual
162percentage rate of interest that may be charged is 12 times the
163maximum monthly rate, and the maximum monthly rate must be
164computed on the basis of one-twelfth of the annual rate for each
165full month. The commission shall establish by rule the rate for
166each day in a fraction of a month when the period for which the
167charge is computed is more or less than 1 month.
168     (7)  Notwithstanding any other provision of this chapter,
169beginning with the first renewal or continuation and at each
170successive renewal or continuation thereafter, the borrower
171shall make a payment of at least 5 percent of the original
172principal amount of the title pledge transaction in addition to
173interest and fees authorized by this chapter. Interest and fees
174authorized by this chapter at each successive renewal or
175continuation shall be calculated on the outstanding principal
176balance. Principal payments in excess of the required 5-percent
177principal reduction shall be credited to the outstanding
178principal on the day received. If, at the maturity of any
179renewal requiring a principal reduction, the borrower has not
180made previous principal reductions adequate to satisfy the
181current required principal reduction and the borrower cannot
182repay at least 5 percent of the original principal balance and
183any outstanding interest and fees authorized by this chapter,
184the title loan lender may, but is not obligated to, defer any
185required principal payment until the end of the title loan
186agreement. No further interest or fees may accrue on any such
187principal amount deferred.
188     Section 4.  Subsection (8) is added to section 537.012,
189Florida Statutes, to read:
190     537.012  Repossession, disposal of pledged property; excess
191proceeds.--
192     (8)  If a borrower who is an active member of the military
193services of the United States has been deployed to a combat or
194combat support posting or is a member of the Reserves or
195National Guard and has been called to active duty, the time
196requirements set forth in subsections (1), (2), and (3) are
197tolled for the duration of the deployment or active duty
198service.
199     Section 5.  Paragraph (o) is added to subsection (1) of
200section 537.013, Florida Statutes, and subsection (3) is added
201to that section, to read:
202     537.013  Prohibited acts.--
203     (1)  A title loan lender, or any agent or employee of a
204title loan lender, shall not:
205     (o)  Sue for deficiency balances if the sale of the titled
206personal property is less than the principal amount due on the
207loan.
208     (3)  If a title loan lender transacts a title loan with a
209member of the military services of the United States, the lender
210shall not:
211     (a)  Take possession of a vehicle of the member or the
212spouse of such member when the member has been deployed to a
213combat or combat support posting or is a member of the Reserves
214or National Guard and has been called to active duty for the
215duration of the deployment or active duty service;
216     (b)  Contact the commanding officer of a borrower who is a
217member of the military services of the United States or anyone
218in the borrower's chain of command in an effort to collect on an
219obligation under a title loan transaction entered into with the
220member or the member's spouse; or
221     (c)  Enter into a title loan agreement with a member of the
222military services of the United States if a military base
223commander has declared that a specific location of the title
224loan lender's business is off limits to military personnel and
225has formally notified the title loan lender of such declaration.
226     Section 6.  Section 537.019, Florida Statutes, is created
227to read:
228     537.019  Conducting business with another business.--A
229title loan lender may not conduct the business of making title
230loans under this act within any office, room, suite, or place of
231business in which any other business is solicited or engaged in,
232or in association or conjunction with such other business, or
233share common areas or employees with any other business.
234     Section 7.  Section 537.018, Florida Statutes, is repealed.
235     Section 8.  This act shall take effect July 1, 2006.


CODING: Words stricken are deletions; words underlined are additions.