HB 1109CS

CHAMBER ACTION



1The State Administration Appropriations Committee recommends the
2following:
3
4     Council/Committee Substitute
5     Remove the entire bill and insert:
6
A bill to be entitled
7An act relating to title loan lenders; amending s.
8494.00797, F.S.; including title loan lenders within a
9prohibition against counties and municipalities regulating
10certain entities subject to the jurisdiction of the Office
11of Financial Regulation of the Financial Services
12Commission; amending s. 537.004, F.S.; requiring payment
13of a license fee prior to being issued a license;
14increasing the amount of certain license renewal fees;
15amending s. 537.008, F.S.; specifying information to be
16printed in title loan agreements; amending s. 537.011,
17F.S.; revising maximum interest rates chargeable on title
18loans; revising title loan agreement extension provisions;
19providing requirements and limitations on extension
20agreements; providing alternative requirements for title
21loans made to certain military personnel; providing
22limitations; requiring the commission to establish rules
23for rates; providing payment requirements for title loan
24borrowers; providing interest and fee calculation
25methodologies; providing criteria and limitations for
26deferring required principal payments; amending s.
27537.012, F.S.; providing for tolling certain title loan
28payment time requirements for certain military personnel;
29amending s. 537.013, F.S.; specifying an additional
30prohibited activity by a title loan lender; prohibiting
31title loans in excess of a certain amount; prohibiting
32certain activities by a title loan lender relating to
33military personnel; providing penalties; creating s.
34537.019, F.S.; prohibiting title loan lenders from
35engaging in certain business activities; creating s.
36537.020, F.S.; providing for credit counseling services
37for borrowers under certain circumstances; providing for a
38grace period extending a title loan agreement for credit
39counseling purposes; providing requirements, procedures,
40and limitations on the provision of such grace periods;
41providing requirements for title loan lenders; providing
42for title loan repayment plans; providing criteria and
43requirements for repayment plans; requiring the Office of
44Financial Regulation to prepare a list of approved credit
45counseling agencies; providing list requirements;
46specifying a required notice; requiring a title loan
47lender to pay a certain amount to a credit counseling
48agency under certain circumstances; providing an
49additional specified notice requirement; repealing s.
50537.018, F.S., relating to preserving authority for more
51restrictive county or municipal ordinances; providing
52appropriations; authorizing additional positions and
53providing a salary rate; providing an effective date.
54
55Be It Enacted by the Legislature of the State of Florida:
56
57     Section 1.  Subsection (1) of section 494.00797, Florida
58Statutes, is amended to read:
59     494.00797  General rule.--All counties and municipalities
60of this state are prohibited from enacting and enforcing
61ordinances, resolutions, and rules regulating financial or
62lending activities, including ordinances, resolutions, and rules
63disqualifying persons from doing business with a city, county,
64or municipality based upon lending interest rates or imposing
65reporting requirements or any other obligations upon persons
66regarding financial services or lending practices of persons or
67entities, and any subsidiaries or affiliates thereof, who:
68     (1)  Are subject to the jurisdiction of the office,
69including for activities subject to this chapter, except
70entities licensed under s. 537.004;
71
72Proof of noncompliance with this act can be used by a city,
73county, or municipality of this state to disqualify a vendor or
74contractor from doing business with a city, county, or
75municipality of this state.
76     Section 2.  Subsections (3) and (4) of section 537.004,
77Florida Statutes, are amended to read:
78     537.004  License required; license fees.--
79     (3)  If the office determines that an application should be
80approved, the office shall issue a license for a period not to
81exceed 2 years. Upon being notified that the license application
82has been approved, and prior to the license being issued by the
83office, a licensee shall pay to the office a licensee fee of
84$10,000 for the first licensed location and $2,500 for each
85additional location.
86     (4)  A license shall be renewed biennially by filing a
87renewal form and a nonrefundable renewal fee of $10,000 for the
88first licensed location and $2,500 for each additional location
89$1,200. A license that is not renewed by the end of the biennial
90period shall automatically revert to inactive status. An
91inactive license may be reactivated within 6 months after
92becoming inactive by filing a reactivation form, payment of the
93nonrefundable $1,200 renewal fee of $10,000 for the first
94licensed location and $2,500 for each additional location, and
95payment of a nonrefundable reactivation fee of $5,000 $600. A
96license that is not reactivated within 6 months after becoming
97inactive may not be reactivated and shall automatically expire.
98The commission shall establish by rule the procedures for
99renewal and reactivation of a license and shall adopt a renewal
100form and a reactivation form.
101     Section 3.  Paragraph (c) of subsection (2) of section
102537.008, Florida Statutes, is amended to read:
103     537.008  Title loan agreement.--
104     (2)  The following information shall also be printed on all
105title loan agreements:
106     (c)1.  The following statement in not less than 12-point
107type that:
108     a.1.  If the borrower fails to repay the full amount of the
109title loan on or before the end of the maturity date or any
110extension of the maturity date and fails to make a payment on
111the title loan within 30 days after the end of the maturity date
112or any extension of the maturity date, whichever is later, the
113title loan lender may take possession of the borrower's motor
114vehicle and sell the vehicle in the manner provided by law. If
115the vehicle is sold, the borrower is entitled to any proceeds of
116the sale in excess of the amount owed on the title loan and the
117reasonable expenses of repossession and sale.
118     b.2.  If the title loan agreement is lost, destroyed, or
119stolen, the borrower should immediately so advise the issuing
120title loan lender in writing.
121     2.  The following statements in not less than 14-point bold
122type:
123     a.  This loan is not intended to meet long-term financial
124needs.
125     b.  You should use this loan only to meet short-term cash
126needs.
127     c.  You will be required to pay additional interest and
128fees if you renew this loan rather than pay the debt in full
129when due.
130     d.  This loan is a higher interest loan. You should
131consider lower cost loans which may be available to you.
132     e.  You are placing at risk your continued ownership of the
133personal property the title for which you are pledging for this
134loan.
135     f.  If you fail to repay the full amount of this loan on or
136before the end of the maturity date or renewal of the loan, the
137title pledge lender may take possession of the property the
138title for which is pledged and sell the property in the manner
139provided by law.
140     g.  If you enter into a title pledge agreement, you have a
141legal right of rescission. This means you may cancel your
142contract at no cost to you by returning the money you borrowed
143by the next business day after the date of your loan.
144
145All owners of the titled personal property must sign the title
146loan agreement.
147     Section 4.  Subsections (1), (2), and (3) of section
148537.011, Florida Statutes, are amended, and subsections (6) and
149(7) are added to that section, to read:
150     537.011  Title loan charges.--
151     (1)  Except as provided in paragraph (6)(a), a title loan
152lender may charge a maximum interest rate of 22 30 percent per
153month annum computed on the first $2,000 of the principal
154amount, and 20 24 percent per month annum on that part of the
155principal amount exceeding $2,000 and not exceeding $3,000, and
15618 percent per annum on that part of the principal amount
157exceeding $3,000. The original principal amount is the same
158amount as the amount financed, as defined by the federal Truth
159in Lending Act and Regulation Z of the Board of Governors of the
160Federal Reserve System. In determining compliance with the
161statutory maximum interest, the computations must be simple
162interest and not add-on interest or any other computations. When
163two or more interest rates are to be applied to the principal
164amount, the lender may charge interest at that single monthly
165annual percentage rate which, if applied according to the
166actuarial method to each of the scheduled periodic balances of
167principal, would produce at maturity the same total amount of
168interest as would result from the application of the two or more
169rates otherwise permitted, based upon the assumption that all
170payments are made as agreed.
171     (2)  The annual percentage rate that may be charged for a
172title loan may equal, but not exceed, the annual percentage rate
173that must be computed and disclosed as required by the federal
174Truth in Lending Act and Regulation Z of the Board of Governors
175of the Federal Reserve System. The maximum annual percentage
176rate of interest that may be charged is 12 times the maximum
177monthly rate, and the maximum monthly rate must be computed on
178the basis of one-twelfth of the annual rate for each full month.
179The commission shall establish by rule the rate for each day in
180a fraction of a month when the period for which the charge is
181computed is more or less than 1 month.
182     (3)  A title loan agreement may be extended for up to five
183additional one or more 30-day periods by mutual consent of the
184title loan lender and the borrower. Each extension of a title
185loan agreement shall be executed in a separate extension
186agreement, each of which shall comply with the requirements for
187executing a title loan agreement as provided in this act. The
188interest rate charged in any title loan extension agreement
189shall not exceed the interest rate charged in the original
190related title loan agreement. A title loan lender may not
191capitalize in any title loan extension agreement any unpaid
192interest due on the original related title loan agreement or any
193subsequent extensions to that title loan agreement. Extension
194agreements may be executed between the parties after the
195commencement date of the extension period to allow continuity of
196terms. Under no circumstance shall a title lender assess further
197interest or any other finance charge after 180 days after the
198execution date of the original title loan agreement. At the
199conclusion of the 180 days, the title loan lender must offer the
200borrower the option of repaying any unpaid principal in no less
201than four equal monthly installments without any additional
202interest or other charge. A title loan lender may not make a new
203original title loan to a borrower if the borrower had a title
204loan, an extension thereof, or an interest-free principal
205repayment of such loan outstanding in the previous 24 hours.
206     (6)(a)  The title loan lender shall determine whether the
207borrower is a member of the military services of the United
208States. If the borrower is a member of the military services of
209the United States or the spouse of a member of the military
210services of the United States, a title loan lender may charge a
211maximum interest rate of 30 percent per annum computed on the
212first $2,000 of the original principal amount, 24 percent per
213annum on that part of the original principal amount exceeding
214$2,000 and not exceeding $3,000, and 18 percent per annum on
215that part of the original principal amount exceeding $3,000. The
216original principal amount is the same amount as the amount
217financed, as defined by the federal Truth in Lending Act and
218Regulation Z of the Board of Governors of the Federal Reserve
219System. In determining compliance with the maximum interest
220specified by this subsection, the computations must be simple
221interest. Add-on interest or any other computations may not be
222used. When two or more interest rates are to be applied to the
223original principal amount, the lender may charge interest at
224that single annual percentage rate which, if applied according
225to the actuarial method to each of the scheduled periodic
226balances of principal, would produce at maturity the same total
227amount of interest as would result from the application of the
228two or more rates otherwise permitted, based upon the assumption
229that all payments are made as agreed.
230     (b)  The annual percentage rate that may be charged for a
231title loan to a member of the military services of the United
232States or the spouse of a member of the military services of the
233United States may equal, but not exceed, the annual percentage
234rate that must be computed and disclosed as required by the
235federal Truth in Lending Act and Regulation Z of the Board of
236Governors of the Federal Reserve System. The maximum annual
237percentage rate of interest that may be charged is 12 times the
238maximum monthly rate, and the maximum monthly rate must be
239computed on the basis of one-twelfth of the annual rate for each
240full month. The commission shall establish by rule the rate for
241each day in a fraction of a month when the period for which the
242charge is computed is more or less than 1 month.
243     (7)  Notwithstanding any other provision of this chapter,
244beginning with the first renewal or continuation and at each
245successive renewal or continuation thereafter, the borrower
246shall make a payment of at least 5 percent of the original
247principal amount of the title pledge transaction in addition to
248interest and fees authorized by this chapter. Interest and fees
249authorized by this chapter at each successive renewal or
250continuation shall be calculated on the outstanding principal
251balance. Principal payments in excess of the required 5-percent
252principal reduction shall be credited to the outstanding
253principal on the day received. If, at the maturity of any
254renewal requiring a principal reduction, the borrower has not
255made previous principal reductions adequate to satisfy the
256current required principal reduction and the borrower cannot
257repay at least 5 percent of the original principal balance and
258any outstanding interest and fees authorized by this chapter,
259the title loan lender may, but is not obligated to, defer any
260required principal payment until the end of the title loan
261agreement. No further interest or fees may accrue on any such
262principal amount deferred.
263     Section 5.  Subsection (8) is added to section 537.012,
264Florida Statutes, to read:
265     537.012  Repossession, disposal of pledged property; excess
266proceeds.--
267     (8)  If a borrower who is an active member of the military
268services of the United States has been deployed to a combat or
269combat support posting or is a member of the Reserves or
270National Guard and has been called to active duty, the time
271requirements set forth in subsections (1), (2), and (3) are
272tolled for the duration of the deployment or active duty
273service.
274     Section 6.  Paragraphs (o) and (p) are added to subsection
275(1) of section 537.013, Florida Statutes, and subsection (3) is
276added to that section, to read:
277     537.013  Prohibited acts.--
278     (1)  A title loan lender, or any agent or employee of a
279title loan lender, shall not:
280     (o)  Sue for deficiency balances if the sale of the titled
281personal property is less than the principal amount due on the
282loan.
283     (p)  Make a title loan with a principal amount in excess of
284$3,000.
285     (3)  If a title loan lender transacts a title loan with a
286member of the military services of the United States, the lender
287shall not:
288     (a)  Take possession of a vehicle of the member or the
289spouse of such member when the member has been deployed to a
290combat or combat support posting or is a member of the Reserves
291or National Guard and has been called to active duty for the
292duration of the deployment or active duty service;
293     (b)  Contact the commanding officer of a borrower who is a
294member of the military services of the United States or anyone
295in the borrower's chain of command in an effort to collect on an
296obligation under a title loan transaction entered into with the
297member or the member's spouse; or
298     (c)  Enter into a title loan agreement with a member of the
299military services of the United States if a military base
300commander has declared that a specific location of the title
301loan lender's business is off limits to military personnel and
302has formally notified the title loan lender of such declaration.
303     Section 7.  Section 537.019, Florida Statutes, is created
304to read:
305     537.019  Conducting business with another business.--A
306title loan lender may not conduct the business of making title
307loans under this act within any office, room, suite, or place of
308business in which any other business is solicited or engaged in,
309or in association or conjunction with such other business, or
310share common areas or employees with any other business.
311     Section 8.  Section 537.020, Florida Statutes, is created
312to read:
313     537.020  Credit counseling services; repayment plan.--
314     (1)  Prior to the maturity date of an original title loan
315agreement or the maturity date of any extension of the title
316loan agreement, if the borrower notifies the title loan lender
317in person that the borrower wishes to exercise his or her right
318to seek consumer credit counseling, the title loan lender shall
319offer the borrower the option of a grace period extending the
320term of the agreement for an additional 4 months from such
321notice, without any additional charge. As a condition of
322providing such grace period, the lender shall require that,
323within the first 7 days of the grace period, the borrower must
324make an appointment and attend a meeting with a consumer credit
325counseling agency and that such consumer credit counseling
326agency notify the title loan lender that such appointment and
327meeting occurred. The borrower may agree to, comply with, and
328adhere to a repayment plan approved by the credit counseling
329agency and, if such plan provides for full repayment of the
330title loan lender in near equal installments before the end of
331the grace period with the first payment due no later than 30
332days after the date the grace period began, the title loan
333lender shall also comply with and adhere to that repayment plan.
334The title loan lender may not seek repossession of the
335borrower's motor vehicle during the grace period unless the
336borrower fails to comply with this section or fails to make
337payments in compliance with the repayment plan. If the borrower
338fails to comply with this section or fails to make payments in
339compliance with the repayment plan, the title loan lender may
340seek possession of the motor vehicle pursuant to the original
341terms of the title loan agreement. Before each title loan
342transaction, the title loan lender may verbally advise the
343borrower of the availability of the grace period consistent with
344the provisions of the written notice in subsection (4) and may
345not discourage the borrower from using the grace period. For the
346purposes of calculating the remaining balance to be repaid
347pursuant to the repayment plan, the plan must include the
348repayment of all unpaid principal plus unpaid interest accrued
349on a daily basis through the first day of the grace period,
350provided, if the borrower exercises his or her right to the
351grace period during the original term of the title loan
352agreement, the entire unpaid amount of the interest agreed to be
353paid for such initial term must be paid during period of the
354repayment plan.
355     (2)  At the commencement of the grace period, the title
356loan lender shall provide the borrower:
357     (a)  A verbal notice of the availability of the grace
358period consistent with the written notice in subsection (4).
359     (b)  A list of approved consumer credit counseling agencies
360which shall be prepared by the office. The office list shall
361include nonprofit consumer credit counseling agencies affiliated
362with the National Foundation for Credit Counseling which provide
363credit counseling services to residents of this state in person,
364by telephone, or through the Internet. The office list must
365include phone numbers for the agencies, the counties served by
366the agencies, and indicate the agencies that provide telephone
367counseling and those that provide Internet counseling. The
368office shall update the list at least once each year.
369     (c)  The following notice in at least 14-point type in
370substantially the following form:
371
372AS A CONDITION OF OBTAINING A GRACE PERIOD EXTENDING THE
373TERM OF YOUR TITLE LOAN AGREEMENT FOR AN ADDITIONAL FOUR
374(4) MONTHS, UNTIL (DATE), WITHOUT ANY ADDITIONAL INTEREST,
375YOU MUST COMPLETE CONSUMER CREDIT COUNSELING PROVIDED BY
376AN AGENCY INCLUDED ON THE LIST THAT WILL BE PROVIDED TO
377YOU BY THIS LENDER. YOU MUST ALSO AGREE TO COMPLY WITH AND
378ADHERE TO A REPAYMENT PLAN APPROVED BY THE AGENCY THAT
379COMPLIES WITH THE FLORIDA TITLE LOAN ACT. THE COUNSELING
380MAY BE IN PERSON, BY TELEPHONE, OR THROUGH THE INTERNET.
381YOU MUST NOTIFY US WITHIN SEVEN (7) DAYS, BY (DATE), THAT
382YOU HAVE COMPLETED AN APPOINTMENT WITH SUCH A CONSUMER
383CREDIT COUNSELING AGENCY. WE MAY VERIFY THIS INFORMATION
384WITH THE AGENCY. IF YOU FAIL TO TIMELY PROVIDE
385CONFIRMATION OF YOUR COMPLETED APPOINTMENT OR IF YOU DO
386NOT COMPLY WITH THE REPAYMENT PLAN AGREED TO WITH SUCH
387AGENCY, WE MAY SEEK POSSESSION OF THE MOTOR VEHICLE
388PLEDGED AS COLLATERAL FOR YOUR TITLE LOAN AGREEMENT.
389
390     (3)  If a borrower completes an approved payment plan, the
391title loan lender shall pay $25 to the consumer credit
392counseling agency.
393     (4)  In addition to all other disclosures required by this
394section, the title loan lender shall provide the following
395notice in at least 14-point type conspicuously within the title
396loan agreement:
397
398IF YOU INFORM THIS LENDER IN PERSON THAT YOU CANNOT REDEEM
399YOUR CERTIFICATE OF TITLE BY PAYING IN FULL THE AMOUNT
400OWING AT THE END OF THE TERM OF THIS AGREEMENT OR MAKE
401YOUR MINIMUM PAYMENT, YOU ARE ENTITLED TO A GRACE PERIOD
402EXTENDING THE TERM OF THIS AGREEMENT FOR AN ADDITIONAL
403FOUR (4) MONTHS, WITHOUT ANY ADDITIONAL CHARGE. THIS
404LENDER SHALL REQUIRE THAT YOU, AS A CONDITION OF OBTAINING
405THE GRACE PERIOD, COMPLETE CONSUMER CREDIT COUNSELING
406PROVIDED BY AN AGENCY INCLUDED ON THE LIST THAT WILL BE
407PROVIDED TO YOU BY THIS LENDER AND COMPLY WITH AND ADHERE
408TO A REPAYMENT PLAN APPROVED BY THAT AGENCY. IF YOU DO NOT
409COMPLY WITH AND ADHERE TO A REPAYMENT PLAN APPROVED BY
410THAT AGENCY, THIS LENDER MAY SEEK POSSESSION OF THE MOTOR
411VEHICLE PLEDGED AS COLLATERAL FOR THIS LOAN.
412
413     Section 9.  Section 537.018, Florida Statutes, is repealed.
414     Section 10.  The sums of $648,945 in recurring funds and
415$57,830 in nonrecurring funds are appropriated from the
416Regulatory Trust Fund in the Office of Financial Regulation
417within the Department of Financial Services for the 2006-2007
418fiscal year for the purpose of funding the provisions of this
419act, and 10 full-time equivalent positions with 415,996 in
420associated salary rate are authorized.
421     Section 11.  This act shall take effect July 1, 2006.


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