No. 29225 (New Rule): R343-1. Rule Governing Form of Disclosures For Title Lenders, Who Are Under the Jurisdiction of the Department of Financial Institutions

DAR File No.: 29225
Filed: 11/14/2006, 04:43
Received by: NL

RULE ANALYSIS

Purpose of the rule or reason for the change:

Under Subsection 7-24-203(2), the Department shall, for title loans, specify by rule ". . . information to be provided in the disclosure form."

Summary of the rule or change:

This new rule establishes minimum standards for the form of disclosure for title loans to protect the public interest.

State statutory or constitutional authorization for this rule:

Subsection 7-24-203(2)

Anticipated cost or savings to:

the state budget:

There is no impact on the state budget as compliance to the rule affects title lenders not the department.

local governments:

Local governments are not involved in regulating the form of title loan disclosures and are therefore not subject to this rule.

other persons:

Title lenders are currently required to comply with the minimum standards of disclosure under Section 7-24-203 and federal law and compliance to the rule should have minimal budgetary impact.

Compliance costs for affected persons:

Title lenders are currently required to comply with the minimum standards of disclosure under Section 7-24-203 and federal law and compliance to the rule should have minimal budgetary impact.

Comments by the department head on the fiscal impact the rule may have on businesses:

Title lenders are currently required to comply with the minimum standards of disclosure under Section 7-24-203 and federal law and compliance to the rule should have minimal budgetary impact. G. Edward Leary, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Financial Institutions
Nondepository Lenders
324 S STATE ST
SALT LAKE CITY UT 84111-2393

Direct questions regarding this rule to:

Paul Allred at the above address, by phone at 801-538-8854, by FAX at 801-538-8894, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

01/02/2007

This rule may become effective on:

01/09/2007

Authorized by:

Edward Leary, Commissioner

RULE TEXT

R343. Financial Institutions, Nondepository Lenders.

R343-1. Rule Governing Form of Disclosures For Title Lenders, Who Are Under the Jurisdiction of the Department of Financial Institutions.

R343-1-1. Authority, Scope and Purpose.

(1) This rule is issued pursuant to Section 7-24-203(2).

(2) This rule establishes minimum standards for the form of disclosure to protect the public interest.

 

R343-1-2. Definitions.

(1) "Department" means the Department of Financial Institutions.

 

R343-1-3. Form of Disclosure.

(1) Content of disclosure form. The disclosure form required by this rule must include:

(a) a statement about the cost of obtaining the loan in the format prescribed in Section 226.18 and Appendix H of Truth in Lending 12 CFR 226;

(b) a statement that failure to make any payment by the end of the contractual grace period may result in repossession of the property pledged to secure the loan;

(c) a statement that title loans are typically high cost loans and that lower cost loans are usually available to consumers with reasonable credit. Consumers should compare the "Annual Percentage Rate" of the loan with other loans that are available from other lenders that typically offer loans;

(d) a statement that if the consumer is obtaining the loan because of problems with their credit they may wish to obtain credit counseling or financial advice from entities listed under "Credit and Debt Counseling" in the yellow pages or the department or a governmental agency which regulates Utah lenders.

(e) the statements described above shall be disclosed on the front side of the disclosure form preceding the borrowers' signature line.

(2) Type size of the disclosure form. The disclosure form required by this rule must be of the following font sizes:

(a) the terms for "Annual Percentage Rate" and "Finance Charge" shall be 12 point;

(b) no other disclosure shall be as conspicuous except the creditor's identity;

(c) all other disclosures shall be at least 9 point.

(3) Disclosure requirements; timing and method of disclosures.

(a) The title lender shall provide the disclosure form to the consumer in writing before the consumer completes the loan agreement.

(b) Disclosures must be readily understandable. The disclosures required by this rule must be conspicuous, simple, direct and designed to call attention to the nature and significance of the information provided. Examples of methods that could call attention to the nature and significance of the information provided include:

(i) A plain-language heading to call attention to the disclosures;

(ii) Boldface or italics for key words; and

(iii) Distinctive type style, and graphic devices, such as shading or sidebars, when the disclosures are combined with other information.

 

KEY: financial institutions

Date of Enactment or Last Substantive Amendment: 2007

Authorizing, and Implemented or Interpreted Law: 7-24-203(2)