This document provides an overview of auto title lending regulations and practices. It discusses licensing requirements, regulatory oversight at both the federal and state levels, advertising rules, how transactions involve multiple parties, standard transaction terms, issues around cross-border transactions, and procedures for default, repossession and sale. The presentation notes key differences between pawn/pledge transactions and installment loans, and how consumer credit laws apply despite the unique nature of auto title lending. It aims to outline best practices for compliance in this industry.

1. The Nuts and
Bolts of Auto Title
Lending
Justin B. Hosie
Elisha Brown

2. Licensing
Regulatory Oversight
Advertisements
Multiple Parties
Transaction Terms
Cross Border Transactions
Default, Repossession, and
Sale
Noteworthy Points
Questions
Overview of the
Presentation

3. Licensing
 Pawn and Pledge
o How are they different than loans and credit
sales?
30 day term and renewals
Non-recourse
oHow are they similar?
 Small Loans, Retail Sales, and Installment Loan
Laws
 States with Title Laws where the Industry
operates under Installment Laws

4. Regulatory Oversight
Federal: CFPB and FTC Considerations
o Added to CFPB complaint portal July 21, 2014
Unexpected charges or interest fees
Loan application issues
Problems with the lender correctly charging and crediting
payments
Issues with the lender repossessing, selling, or damaging the
consumer’s property or vehicle
Unable to contact lender
State Agencies
Municipalities

5. Advertisements
 General Rules for Consumer Credit
oTILA
oFTC Internet Advertising Guidance
 State Statutes
oSome Pawn/Pledge States Prohibit Calling the
Transaction a “Loan”
oGeneral Considerations
 Posting Licenses and Fees

6. Multiple Parties
 Multiple Parties, Marital Status, and ECOA
 Co-Owners (Getting Consent)
 Cosigners
 Co-Borrowers – Proceeds to Both People, Both
Sign

7. Transaction Terms
 General Consumer Credit Laws Apply: TILA, ECOA,
GLBA, etc.
 Dollar Amounts
 Duration and Term
 Typical Disclosures
 Renewals, Auto Renewals, Gunn and Tucker Cases
 Title: “Unencumbered” Requirement
 Title: Paying the Lien Fee – Some States Think it’s a
Finance Charge, Despite Reg. Z
(Continued on next slide)

8.  Disclosures:
oGeneral Consumer Credit Requirements Apply:
o Adverse Action
o TILA Disclosures
o Privacy Policy, etc.
oVarying State Disclosures

9. Electronic Liens and Paper Titles

10. Cross Border Transactions
 General Rule
o Midwest Title
o But see: Kaneff v. Delaware Title Loans, Inc.
 North Carolina
 Washington, DC
 West Virginia Actions

11. Is the Repo Agency a Third Party
Service Provider?
YES!

12. Default, Repossession, and Sale
 Often “Non-recourse” Transactions
 Repossession and Sale as Only Collection
Option
 Notices of Default and Sale
 Notices of Surplus, but often no deficiency
permitted
oMust report funds to state treasury department for
non located customers

13. Noteworthy Points
 Pawn/Pledge transactions are not installment loans
 Unique licensing and oversight
 Renewing 30 day terms
 Additional advertising limits
 Consumer credit laws such as TilA, ECOA, GLBA, etc. do
apply
 Multi-party transactions involve careful planning to properly
comply
 Beware of cross border relationships, in certain places
 Don’t expect to pursue a deficiency in a pawn/pledge state

14. QUESTIONS?

15. Contact Information
Justin B. Hosie
Hudson Cook, LLP
6005 Century Oaks Drive
Suite 500
Chattanooga, TN 37416
(423) 490-7564
jhosie@hudco.com
Elisha Brown
Speedee Cash
412 Hwy 61 N
Natchez, MS 39120
(601) 445-2377
ebrown@speedeenet.com