|
Here’s the “quick summary” of the changes being
implemented for Title Loan Professional. If you disagree with any of these changes, or have any
questions, please let us know as soon as possible.
The “biggie” is the 5% principal reduction schedule starting with
the 3rd renewal
This is more complicated than it sounds, so please call for an
in-depth explanation
A new Repo Log, per the state’s specifications
A new Title Pledge Log, per the state’s specifications
New contract verbiage for all five versions of our TN title loan
contract
The main changes are for the automatic renewal and the 5%
principal reduction
There are a number of new state-mandated clauses in a 14-point
bold font
There is a new returned check fee clause suggested by a TN
auditor
A revised Renewal Notice with the address to show through a window
envelope
A revised payment Receipt, as suggested by the state to one of our
clients
The minimum payment shown on the receipt and renewal notice will
include the 5% of principal
Because the principal reduction is not absolutely required, there
will be a new “renewal payment” field
Both the F&I min. payment and the renewal payment will appear on the
loan screen
It will be your decision whether to accept the F&I min. payment or
require the renewal payment
Most of our clients say they will not default a client for missing a
5% principal reduction
The state says you can defer the 5% principal reduction, but
the F&I must be reduced 5%
There will be an option for two “repo in progress” loan statuses
One status will continue to accrue fees and interest
The second status will not accrue fees and interest
This way, you can control when the fees and interest stop
accruing on an in-progress repo
On new loans, you will be able to specify the original loan date and
original principal
This is needed in case a loan needs to be backdated, re-printed
or re-signed
Since loans cannot be refinanced, this is imperative to get
clients on valid new contracts
Please call for further explanation of why this critical
feature is needed
The ability to have multiple loans on a singe vehicle with a $2,500
combined limit
The following fields will be added to the Account Summary screen:
Original Loan Date (editable), Original Loan Principal (editable),
Current Renewal Number, Min. payment F&I only, Principal Reduction
Due, Total Payment Due with Principal.
Now,
for the “in detail” discussions that lead to the “quick summary”
above ...
Question marks are things you can convey to us, so please let us
have your comments. Text in italics comes straight from the TN Title
Pledge website. Where our clients have commented, you will see the
person’s initials and their comments. Where you see “per TN” or “TN
says” this indicates information given to us by the state of TN
verbally (please keep in mind that this does not mean the
information is binding). Where you see “MRX” you can hear the
comments of an operator who has hired three top lawyers to get
professional advice on these matters. Mr. X is usually not in
agreement with what we’ve heard from the state or the majority of
the lenders who use our software, but it’s always good to hear an
educated viewpoint from someone “in the know.”
Repo
Log:
Customer Info (loan number, customer name), Vehicle Info (year,
make, model, color, VIN), Account Info (account balance, maturity
date=payment due date per TN, # days past maturity date, total
owed), Repo Info (date=actual date of repo, date available (for
sale=repo date+20 days per TN), cost of storage, repo cost,
redeemed/sold/caught-up (pick the appropriate word per TN), date
sold, name of purchaser, salvage price of vehicle), Sale Info (#
days held before sale=days between repo and sale, date sold, name of
purchaser, method of payment, sale price of vehicle, amount due to
customer=sale amount-total due). Will be run from a repo issued
date, to a repo issued date, and will only list loans with an entry
in the “Repo Issued” date field if a report type of “All Repos
Issued” is chosen, or an entry in the “Received Vehicle” date field
if a report type of “Actual Repossessions Only” is chosen. Our
current plan is to put the new fields above on the Repo form and
have the user enter them manually on a repo-by-repo basis. Please
give us your opinion on this report if you have other ideas. There
are two “name of purchaser” fields. Do you know of any reason why
there should be two different names on one Repo Log entry? If so,
please explain. Otherwise, we will use the same name in both places.
AOCG updated software methodology: the report to work as described
above.
Title Pledge Report: Date (the loan date or the renewal date, per TN),
Agreement number (TLP loan number), New, Renewal (the word New or
Renewal, per TN), Customer Name, Residence Address (full address,
including city, state, zip, per TN), Date of Birth, Physical
Description of Pledgor (height, age, color of eyes, per TN), Social
Security Number, Make, Model, Year, VIN, License Plate Number, ID
Number of Photo, Issuing Agency (State/Federal). This report will be
run from a date to date, with each renewal being picked up based on
the renewal date, per TN.
AOCG updated software methodology: the report to work as described
above.
CB says: we will forward a sample of our idea of this report to AOCG
(but not received). KL says date is original loan date, new=new loan
amount, renewal=renewal amount, pledgor description can be “see
driver’s license”, normally use drivers license for photo ID,
state=TN/NC/etc. TN said pledgor description should not be “see
driver’s license” but can be the basic information on the license:
age, height, hair color, eye color. TN also says New/Renewal is the
word New or Renewal, not the amount.
Contracts:
Contract wording change for automatic renewals:
45-15-113(a) of the Act sets forth the term of the
title pledge agreement as 30-days; however, “such agreements may
provide for renewals for additional 30-day periods, which may occur
automatically,” unless one of four (things) has occurred as
enumerated under 45-15-113(a) (1) through (4). The loan agreement
must specify that automatic renewals will occur if that is the
intent of the agreement. Additionally certain disclosures must be
provided the Pledgor with every renewal as specified in
45-15-113(b). The title pledge lender must substantiate that the
applicable disclosures were provided and document the loan file
accordingly.
Here is a clause we’ve been asked to add
by one of our clients. Unless we hear otherwise from you, this
clause will appear on the new TN contract in a bold 14pt font: “This
contract automatically renews every 30 days. According to Tennessee
Code Annotated, Section 45-15-101 of the Tennessee Title Pledge Act
and Amendments, signed June 17, 2005, you are now required on your
3rd and every subsequent renewal to pay 5% of your ORIGINAL LOAN
AMOUNT (i.e., the original loan Principal). This 5% of the original
Principal will be added to your renewal payment of Fee and Interest.
If you do not pay the Renewal Fee and Interest, plus the Principal
payment, your vehicle will be in jeopardy of repossession.”
AOCG updated software methodology: the contract wording above, plus
other TN-mandated clauses to appear in a bold 14-point font.
KL will use contract TN1, Receipt1. CB will use contract TN3,
Receipt 1. JM will use contract TN3, Receipt1(Unsigned). MRX says
that a toll free number and other contact information has to appear
on the contract for client questions, in a 14pt bold font, but he
doesn’t know what the toll free number is. It’s good to know he’s
human like the rest of us.
Suspension of Automatic Renewals:
Please tell us is there any case in which you would want the program
to stop automatic renewals automatically, without the loan status
being changed to “Paid in Full” or “Write-Off” or “In Possession.”
Also, do you want the program to continue to renew and accrue
interest while the loan status is “To Be Repoed” (this is default
behavior of the program, but you have the option to change this).
One client has suggested adding a new loan status: “Repo in
Progress, No Interest” so that the user can pick between a “to be
repoed” loan that continues to accrue interest, and one that
doesn’t. Do you agree or disagree? As we understand it, these are
the things that can happen to trigger a loan to stop renewing, per
45-15-113 and our discussions with multiple clients: (1) Client
exercises 24 hour right of recision. (2) Client fails to pay 5%
principal reduction (lender has the option to defer unpaid principal
to the end of the loan). (3) Client pays off loan in full. (4)
Client surrenders car. (5) Lender notifies client that loan will not
be renewed. (6) Default. From discussions with our clients, it
appears that some lenders will stop accruing interest only when the
vehicle is actually in their possession, at least until TN delivers
a clear ruling (do you agree?). Please keep in mind that if the
program over-accrues fees/interest, you can always credit the
fees/interest, with a memo of something like “Repo Fees/Interest
Credit.” It is our understanding that TN is currently discussing an
option to continue accruing interest for 60 days from the last
period actually paid (or something like that). As of 10-3-2005, this
was still in the works, per TN. We don’t see this as a programming
issue, per se, but of companies like yours knowing and deciding when
to stop accruing fees/interest, and when to credit any fees/interest
in excess of the state-allowed amounts.
AOCG updated software methodology: you decide when a loan stops
accruing interest and fees.
KL says: current method is still okay for us, says interest can be
accrued for 60 days, add new loan status for “To Be Repoed, No
Interest”. TN said that this 60 day period is being discussed, but
there is no definitive ruling as of 10-3-2005. RB says: AOCG method
is okay, will write off over-accrued F&I. RH says: the client is not
in default until we locate the car, will continue to accrue F&I till
then. MRX says: Default occurs when the repo is issued, not when the
car is in possession. He and his team of lawyers disagree that the
state can “interpret” default to mean something else and that an
interpretation of “default” as being only when the car is in
possession would not hold up in court. In his own words, MRX says:
“I have heard from you and from others that the state may take the
position that you can place a car out for repo that is
not yet in default. One of our attorneys (literally)
laughed out loud when we posed that legal position to him ... I know
[many] of your clients are small, and don't want to spend a lot on
lawyers, etc., but I would advise their getting some legal advice
before blindly following the state’s directives ... they may
themselves on the wrong end of a very ugly class action. With these
surety bonds in place, the consumer advocate lawyers are going to be
swarming, because they now know there will be a $200,000 bond there
from which to extract a judgment and/or settlement. Just my 2 cents
worth...” However, based on the legal research below, MRX later
said, “Actually, Mike, I am working with an attorney right now that
is telling me he thinks WE CAN draft a contract that will allow for
us ‘to go looking’ for the car and still not declare the loan in
default. He and I are working on language to that effect even as we
speak. I have to tell you... the concept of sending a repossession
agent out looking to repossess a car on a loan that IS NOT in
default runs counter to my basic sense of logic... But I leave the
law to the lawyers, and we are working with one now who believes
that if the language is drafted ‘very carefully’, we can put
a car out for repo without declaring the loan in default.”
Here are the research findings of a third party on the legal meaning
of the term “default” for industry purposes in Tennessee: ... The
term “default” is not specifically defined in the Title Pledge Act.
However, it is referenced in a couple of places. Section 45-15-113
states that title pledge agreements and property pledge agreements
(referred to herein as “agreement”) may be automatically renewed for
thirty (30) day periods unless there is a default by the pledgor
of any obligation pursuant to the agreement. § 45-15-113(a)(4)
(emphasis added). Further, in § 45-15-114(b), the term “default” is
again referenced in the context of a default of any obligation
pursuant to the agreement. Under Tennessee law, statutes are
construed by first looking to the language itself and applying its
natural and ordinary meaning, without forced or subtle construction
that limits or extends the meaning of the language. State of
Tennessee ex rel. Pope v. U.S. Fire Ins. Co., 145 S.W.3d 529,
535 (Tenn. 2004); Pursell v. First Am. Nat’l Bank, 937 S.W.2d
838, 840 (Tenn. 1996). The courts are to “give statutory terms
their well-recognized common law meaning as long as doing so is
consistent with the remainder of the statute and is harmonious with
its general purpose.” Davenport v. Chrysler Credit Corp.,
818 S.W.2d 23, 28 (Tenn. Ct. App. 1991). I looked at the definition
of “default” in Black’s Law Dictionary. The definition is
“omission or failure to perform a legal or contractual duty; esp. a
failure to pay a debt when due.” I then looked throughout the
Tennessee Code Annotated for a definition of “default.” I only
found one in the Self Service Storage Facility Act, which is “the
failure timely to perform any obligation or duty set forth in this
chapter and the rental agreement.”
Tenn. Code Ann. §
66-31-102. Default is naturally referenced throughout the Code, but
not so specifically defined. In the Uniform Commercial Code dealing
with Leases, the statute says that whether a lease is in default is
determined by the lease agreement and “this chapter.”
Tenn. Code Ann. §
47-2A-501. The parties can define the term “default” in their
contract. The courts will likely interpret the term to mean any
failure to comply with any contractual duty. The contractual duties
should mirror any mandatory statutory provisions. For example, §
45-15-110 requires certain mandatory language and terms to be in the
agreement. The parties cannot agree in their contract that the
maturity date will be ten (10) days from the date the agreement was
signed and then declare a default when the borrower fails to pay at
the end of that ten (10) day period because the statute states that
the maturity date “shall be thirty (30) days” after the agreement is
executed. Except for these few
exceptions that are specifically stated in the statute, the parties
are free to define “default” in the contract.
Here are the thoughts of another legal
mind: The default provision of § 45-15-113(a)(4) may be construed as
a lender-protection provision which creates a condition precedent to
the borrower’s right to renew. As a lender-protection provision, it
should be waiveable by the lender, permitting automatic renewal by
the lender subject to the constraints of Section 10 of the
amendments. Such a construction of the default provision is
consistent with the standard construction of the default provision
of the U.C.C., § 48-9-601 et seq. It is well settled that
under the U.C.C., default is defined by the contract between the
parties, and default can always be waived by the lender. Such a
construction of the default provision is also consistent with other
provisions of the amendments which generally contemplate the
continued accrual of fees and interest until repossession. For
example: Section 9(b)(3)(C) provides for notice to the borrower
that additional interest and fees will be charged if the borrower
fails to “pay the debt in full when due”; Section 10 places a limit
on the deferral of fees and interest, which implies that, subject to
this limitation, fees and interest can be deferred; and, Section
11(b) provides that no further interest or other fees can be charged
from the commencement of the twenty (20) day holding period, which
implies that fees and interest can be charged up to the time of
repossession which typically occurs after default.
SSN:
The social security number should not appear on the contract, per
TCA 45-15-110.
AOCG updated software methodology: the SSN will not appear on the
new TN contracts generated by our software.
Renewal Notice: TN says the Renewal Notice must go out 5 days or more
before the payment is due. The information on the Renewal Statement
would be: Loan number, Scheduled Renewal Date, Payoff Amount and
Payoff Date to avoid automatic renewal, Monthly Rate of Interest,
Monthly Rate of Fee, APR, Original Principal Balance, Present Loan
Balance, Monthly Fee and Interest to be added if not paid off, Total
Dollar Cost of Credit for the new 30-day period, Total Amount Due
after loan renews. We will format the customer name to fit through a
standard window envelope, and there will be an option to print a
batch of statements by due date range, including past due clients
whose loans are still active (still accruing fees and interest).
AOCG
updated software methodology: the renewal notice to work as
described above, with minor changes suggested by TN.
SH says it must be mailed 7-8 days in advance to be received 3-5
days in advance of the due date, and that the renewal notice must
show the Federal Truth in Lending Disclosures. KL says state will
accept our current renewal notice with minor modifications and has
verified this with TN.
Old
“legacy” loans: do you intend to refinance all loans starting Nov. 1, so
that they will be done on a contract with the new contract wording?
If not, please explain. We will have an option in the software to
allow you to specify the original loan amount and loan date so that
the 5% reductions will be correct if you do reprint contracts with
the current principal due on the loan.
AOCG
updated software methodology: you choose whether to refinance or
not.
CB says state will not require new contracts on grandfathered loans.
SH will do all new contracts. KL will do new contracts. RS will do
new contracts. TN says “we don’t know, will try to verify.” RB says
we will probably print new contracts. RH says we will do a “wash”
refinance, printing new contracts. MRX says the state cannot apply
the new Nov. 1 regulations to contracts made under the old law and
that the 5% principal reduction should not apply to grandfathered
loans. He says the state cannot make the new law retroactive to
grandfathered loans.
Principal Reductions:
The principal reduction requirement set
forth in Section 10 of the amendments to the Act provides for the
manner in which principal reduction is to be applied. The principal
reduction requirement becomes effective November 1, 2005. For title
pledge agreements entered into November 1, 2005 and after, the
principal reduction requirement is to be applied at the third (and
subsequent) renewal(s). If a contract was entered into prior to
November 1, 2005, the Department will consider the month of November
to represent the initial contract month for purposes of principal
reduction; therefore, (in this example) February 2006 is the first
month during which principal reduction would be applicable.
A 5% principal reduction is required on the 3rd
renewal and each subsequent renewal. Do you interpret this to always
apply to the current actual principal, or do you have another
interpretation? For instance, if a client is way ahead of schedule
and then can’t come up with and additional 5% one month, would you
look at his pre-computed schedule and say that he’s okay, or would
you say an additional 5% is always required, regardless of his being
ahead of schedule? One of our clients reports: “I asked Steve Henley
about how to handle the principal reduction if a customer has a $100
loan and comes and pays their $22 f&I, plus $50 the next month,
reducing the loan balance to $50. His next 2 payments would be
$11.00 each, however on the next payment it would be $16.00. The
principal reduction payment is always based on the ORIGINAL LOAN
AMOUNT no matter how much the have paid down until it is paid off.”
AOCG updated software methodology: it is our intention to always use
5% of the original loan amount, unless we hear otherwise from you.
It will be your option to accept the F&I minimum payment and defer
the 5%.
CB wants to pre-compute, allow client to not pay 5% if ahead of
schedule. SH says 5% is always required, based on original
principal. KL says always required. RS says always required. JM says
always required. RB says always required. MRX says he believes the
new law is very clear that a client does not have to always pay a 5%
principal reduction if he is ahead of schedule in paying down
principal. MRX says 5% principal reduction is not required at all on
loans signed prior to Nov. 1.
Principal in Arrears:
What will your company do if the client can’t pay the 5% principal
reduction? Will you (1) require him to pay the scheduled minimum
payment or be in default, (2) reduce the interest by the required 5%
and defer the principal payment, (3) some other method?
AOCG updated software methodology: the updated program will handle
either method 1 or 2, your choice.
CB will not default automatically. SH wants option to defer, also
wants option to take 5% from interest and apply to prin. reduction
(voluntary reduction of interest). KL says no conversion of interest
payment to prin. payment. RS says show principal in arrears on
receipt. JM says renew the loan and defer the principal. RB says
renew the loan and defer the principal.
Third Renewal: The term 3rd renewal in itself can be
somewhat confusing. We take this to mean the 3rd time the
loan is renewed, which means the 4th installment
(scheduled payment) of the loan. Do you agree? When the loan is
first made, that is an installment, not a renewal, and the first
payment made is of the origination fee. The 1st renewal
of a loan is the 2nd installment of the loan. The 2nd
renewal of the loan is the 3rd installment. The 3rd
renewal of the loan is the 4th installment, or 4th
scheduled payment. Please let us know if you want the 5% principal
reduction to kick in on the 4rd installment (3rd
renewal), as in this example. The minimum payment will be the fee
plus the interest, plus 5% of the original loan principal starting
with the 3rd renewal, or 4th scheduled
payment. For example, on a $1000 loan made on Jan 1 and due Jan 31,
the Jan min. payment would be $220, the Feb. min payment would be
$220, the March min. payment would be $220, and the April min.
payment would be $270, assuming the minimum payment was the only
amount paid each month. Do you agree or disagree? If so, please
explain.
AOCG
updated software methodology: there will be 3 payments w/o 5%
principal required.
CB agrees with AOCG. SH says 2 payments w/o principal, 3rd
scheduled payment starts 5%. KL says there will be 3 payments
without the 5%, the 4th scheduled payment is when the 5%
kicks in, says Steve Henley has confirmed this three times. RS
agrees. RB agrees. RH disagrees, says state will probably reverse
this interpretation to 2 payments w/o principal. MRX agrees with the
AOCG method.
Receipts:
Which payment receipt number are you using with our software, and do
you see any need for changes to the receipt? If so, please list all
the fields that you want to appear on the receipt. Right now we are
implementing our Receipt1 with changes requested by TN.
AOCG updated software methodology: we recommend using the revised
Receipt1. If you prefer to use another receipt, please make sure it
complies with TN regulations and let us know if any changes are
needed.
SH will provide a sample of receipt. KL is using Receipt1, wants to
keep the same with TN changes. RS will use Receipt1 unless state
advises otherwise. JM says use current receipt, will let AOCG know
if any changes are needed. RB says AOCG receipt is okay.
Minimum Payment: What happens to the scheduled minimum payment when the
principal payment is in arrears? Does the minimum payment include
the 5% that was not previously paid, or do you just not worry about
that until the loan is paid off? Right now the current plan is to
require the F&I with an option to defer the 5% principal reduction.
To show principal in arrears separately, we will need to know which
receipt number in our program your company is using and how you
would want the receipt to be worded without confusing your clients.
AOCG
updated software methodology: the required minimum payment will be
F&I only. The minimum payment including the 5% principal will be
called the “renewal payment” and will be displayed but not required
by the software. It is your decision whether to require and enforce
the renewal payment. The majority of our clients will ask for the
renewal payment but accept the F&I minimum payment.
CB says include principal in arrears. SH says show min. payment w/o
principal in arrears, show principal in arrears separately. KL says
AOCG method. JM wants to enter arbitrary min. payment manually, then
have the computer automatically bump up if state required min.
payment is higher. RB says AOCG method.
Multiple Loans: Section (12)(a)(16) specifically prohibits the
consolidation of title pledge agreements. However, a customer may
have more than one loan provided the following conditions are met:
1) each loan is made separately; 2) a 5% principal reduction is made
at the 3rd and subsequent renewal for each loan; and 3) loans are
made to the same borrower, on the same title, from the same lender
at the same location and combination of all outstanding loan
balances shall not exceed $2,500. If the term “loan balances”
means outstanding principal balances, multiple loans should not be a
problem. However, if the term “loan balances” is meant to include
all fees and interest, you will have to be very careful not to make
multiple loans that may exceed $2,500 including fees and interest on
both loans. Our software does support multiple loans and has a
customer credit limit capability, but it does not stop future fees
and interest from exceeding $2,500.
AOCG
updated software methodology: there is a question as to whether
multiple vehicles allows loans over $2,500 combined. Our opinion is
that it seems the limit is $2,500 per vehicle, not per client. But
this is your call, not a programming issue.
CB interprets “loan balances” to be “outstanding principal
balances.” KL agrees. RS agrees. JM agrees. RB agrees. RH agrees. SH
agrees, thinks multiple loans on multiple vehicles may allow loans
above $2,500.
30
Day Loans:
State-mandated 30 day loan periods means all entries in the Due Date
Exclusion file should be deleted (per 45-15-110).
Lien
Form:
TN Application for Noting of Lien on Certificate of Title. Do you
want the system to be able to fill out this form on a laser printer?
If so, please fax the form you use to 615-751-9975, with a cover
letter with your company name if you want the form to print on plain
paper. If you want the original form to be inserted in the printer
and filled out by the program, please mail us several originals of
the form you use and be sure to include your company name and
contact information.
AOCG updated software methodology: we will add the lien form if time
permits, but to do so we will need your company to mail us some
original forms (not copies) for testing.
Release of Lien Reminder:
One of our clients suggested a reminder if a loan has been paid and
a “release of lien” checkbox has not been checked. This reminder
might start on the 15th day and count down until the 30th
day until the checkbox is checked. Would you use such a feature, or
find it annoying? Right now we are not planning on implementing this
feature.
Consensus vote: No, more trouble than it’s worth.
Separate TL cash drawer:
Do you want separate cash drawer reporting for cash advances, check
cashing and title loans required? With this program change, all TL
transactions would go to one cash drawer, all CA transactions would
go to one other cash drawer, and there would be an option for CC
transactions to either go to a third cash drawer, or to the CA
drawer. Please note that this method is not compatible with cash
drawers being assigned to each employee at login time. Please tell
us your preference? [RA will do this if time permits, not required
by TN.
Consensus vote: No, most customers will assign cash drawers to
employees, not a loan type.
Reports:
Will you need any changes to the current reports to help keep your
TL operations separate from your CA, CC and other operations? We are
not planning any report changes unless so requested by our clients,
other than the cash drawer change mentioned above, if so requested
by our clients.
Consensus vote: No report changes needed.
Questions posed to Steve Henley (these questions have been posed to
TN but not yet answered).
If you have additional questions, now is the time to let
us know!
Steve,
Here is a list of questions our clients have posed to which we still
don’t have clear answers. Your help would be greatly appreciated. If
you can respond to these questions, we will forward your responses
to our numerous TN clients, which may save you a number of phone
calls. It might be a good idea to cut and paste the questions and
answers to the web site. That might help greatly reduce the volume
of calls you get as the Nov. 1 deadline nears. – Mike Burch, Alpha
Omega Consulting Group, Inc.
Should the Social Security Number appear on the contract (1) in
full, (2) not at all, (3) like a credit card, for example:
***-**-7709.
If the current contract does not contain a clause stating that the
loan is auto-renewing, can the lender do a one-time “wash” refinance
the first time the client comes in after November, to get the loan
on a valid signed contract? For instance, the client comes in owing
$100 in principal and $22 in F&I. He pays $22 and leaves still owing
$122. He has not “refinanced” in terms of the funds for one loan
actually paying off another loan, but the principal he owes has
simply been transferred to a new valid contract. Is this permissible
on a one-time basis? If not, what can lenders do about grandfathered
loans where the original contract wording may not be “up to snuff?”
Is there a Plan B?
If a client is ahead of schedule on paying back his principal, then
wants to “take a breather” on one payment, is this allowed as long
as he is ahead of his pre-computed schedule? For instance, before
the third renewal, a client with a $1,000 loan has already paid back
$900 of his principal, owing only $100 when the first 5% principal
reduction is due. According to the pre-computed schedule, his
minimum payment would be $220 + $50 = $270. But based on his actual
principal, his payment is only $22. Is it okay to not require an
additional 5% principal reduction as long as the client is ahead of
the pre-computed schedule and his minimum payment is less than the
pre-computed minimum payment? Or is the additional 5% always
required, regardless?
Our clients need to know if they can still accrue interest when a
loan is in default but has not yet been located and thus not
repossessed, or if a client is past due but not yet in default. We
have heard that there may be a 60 day period in which the loan can
continue to automatically renew. Can you confirm this? If not, our
clients may be forced to repossess even though neither the lender or
the borrower want the repossession to take place. Until there is a
clear ruling on the 60 day period, what options do our clients have
when their client is past due?
On the Repo Log, please confirm that the maturity date is the
current payment due date (the end of the oldest unpaid loan period).
For instance, if a payment was due on Nov 30 but the payment has not
been paid, if the current month is Jan., would the maturity date
still be Nov. 30? If not, please advise us how to calculate this.
Also, does the “total owed” include fees/interest, or just unpaid
principal?
On the Title Pledge Report, please confirm that the columns New and
Renewal will have the appropriate word “New” or “Renewal” and that
these are not dollar amount fields. Is the Date field the original
loan date for a new loan and the renewal date if the loan has been
renewed?
It would be helpful to see sample entries on the web site reports.
It’s hard to tell if some fields are Yes/No, words, dates, or dollar
amounts. Some are obvious, but not all.
In the following, do you interpret “outstanding loan balances” to
mean “outstanding principal balances” or something else? “Section
(12)(a)(16) specifically prohibits the consolidation of title pledge
agreements. However, a customer may have more than one loan provided
the following conditions are met: 1) each loan is made separately;
2) a 5% principal reduction is made at the 3rd and subsequent
renewal for each loan; and 3) loans are made to the same borrower,
on the same title, from the same lender at the same location and
combination of all outstanding loan balances shall not exceed $2,500.”
If “outstanding loan balances” does not mean “outstanding principal
balances” then can a single loan of $2,500 accrue fees/interest,
since this would put the “outstanding loan balance” over $2,500?
Thanks so much for your help.
Mike Burch
Alpha Omega Consulting Group, Inc.
In Tennessee 615-662-9537
Other States 1-866-802-5742
|
