74th OREGON LEGISLATIVE ASSEMBLY--2007 Regular Session
Enrolled
House Bill 2204
Ordered printed by the Speaker pursuant to House Rule 12.00A (5).
Presession filed (at the request of Governor Theodore R.
Kulongoski for Department of Consumer and Business Services)
CHAPTER ................
AN ACT
Relating to title loans; creating new provisions; amending ORS
725.340, 725.600 and 725.615; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 725.600 is amended to read:
725.600. As used in ORS 725.600 to 725.625:
(1) A lender is:
(a) 'In the business of making title loans' if at least 10
percent of all loans made by the lender are title loans.
(b) 'In the business of making payday loans' if at least 10
percent of all loans made by the lender are payday loans.
(2) 'Lender' includes individuals, corporations, associations,
firms, partnerships, limited liability companies and joint stock
companies. 'Lender' does not include a financial institution or
trust company, as those terms are defined in ORS 706.008.
(3)(a) 'Payday loan' means a loan, other than a purchase money
loan:
(A) Made primarily for personal, family or household purposes;
(B) Made for a period of 60 days or less or for which the
lender may demand repayment within 60 days; and
(C) Usually evidenced by a check or electronic repayment
agreement provided by or on behalf of the borrower.
(b) 'Payday loan' does not include a loan for a period of more
than 60 days, the repayment of which the lender may accelerate
upon a default by the borrower.
(4) 'Title loan' means { + : + }
{ + (a) + } A loan, other than a purchase money loan { + ,
that is + }:
{ - (a) - } (A) Secured by the title to a motor vehicle,
recreational vehicle, boat or mobile home;
(B) Made for a period of 60 days or less { - ; - }
{ - (C) - } with a single payment payback; and
{ - (D) - } { + (C) + } Made by a lender in the business of
making title loans; { - or - }
(b) { + A loan + } that is secured, substantially equivalent
to a title loan as defined in paragraph (a) of this subsection,
and designated as a title loan by rule or order of the Director
of the Department of Consumer and Business Services { - . - }
{ + ; or + }
Enrolled House Bill 2204 (HB 2204-B) Page 1
{ + (c) A sale-leaseback arrangement between a consumer and a
purchaser for a motor vehicle, recreational vehicle, boat or
mobile home when:
(A) Title and all rights to the vehicle, boat or mobile home do
not transfer from the consumer to the purchaser in a bona fide
sale of the vehicle, boat or mobile home, or the consumer retains
equity in the vehicle, boat or mobile home following the
consumer's sale to the purchaser;
(B) The purchaser and the consumer agree within 60 days of the
consumer's sale of the vehicle, boat or mobile home to the
purchaser that the consumer has an option to or will repurchase
the vehicle, boat or mobile home from the purchaser for a nominal
price or a price other than the market value of the vehicle, boat
or mobile home determined at the time the lease expires;
(C) The purchaser or an agent of the purchaser, during the term
of any lease of the vehicle, boat or mobile home to the consumer,
holds a check, electronic repayment agreement or other evidence
provided by or on behalf of the consumer of the consumer's
agreement to repurchase the vehicle, boat or mobile home; or
(D) The director by rule or order designates the sale-leaseback
arrangement as a title loan. + }
SECTION 2. ORS 725.615 is amended to read:
725.615. { + (1) + } A lender in the business of making title
loans may not:
{ + (a) Make or renew a title loan at a rate of interest that
exceeds 36 percent per annum, excluding a one-time origination
fee for a new loan;
(b) Charge an origination fee for a new title loan of more than
$10 for each $100 of the amount of the loan;
(c) Make or renew a title loan for a term of less than 31 days;
(d) Charge a consumer any fee or interest other than a fee or
interest described in paragraph (a) or (b) of this subsection or
in subsection (2) of this section; + }
{ - (1) - } { + (e) + } Include any of the following
provisions in a title loan contract:
{ - (a) - } { + (A) + } A hold-harmless clause;
{ - (b) - } { + (B) + } A confession of judgment or other
waiver of the right to notice and the opportunity to be heard in
an action;
{ - (c) - } { + (C) + } An agreement by the consumer not to
assert any claim or defense arising out of the contract against
the lender or any holder in due course;
{ - (d) - } { + (D) + } An executory waiver or a limitation
of exemption from attachment, execution or other process on real
or personal property held by, owned by or due to the consumer,
unless the waiver or limitation applies only to property subject
to a security interest executed in connection with the loan; or
{ - (e) - } { + (E) + } A clause permitting the
continuation of interest after repossession of the consumer's
motor vehicle, recreational vehicle, boat or mobile home;
{ - (2) - } { + (f) + } Conduct a title loan business where
liquor or lottery tickets are sold or where gambling devices are
located;
{ - (3) Charge the consumer more than one fee under ORS
30.701 for dishonored checks when the consumer issues more than
one check to the lender. However, the lender may recover from the
consumer any fee charged to the lender by an unaffiliated
financial institution for each dishonored check; - }
Enrolled House Bill 2204 (HB 2204-B) Page 2
{ - (4) - } { + (g) + } Require or accept from a consumer a
set of keys to the motor vehicle, recreational vehicle, boat or
mobile home whose title secures the title loan;
{ - (5) - } { + (h) + } Make more than one outstanding loan
that is secured by one title;
{ - (6) - } { + (i) + } Renew { - a - } { + an
existing + } loan that is secured by one title more than
{ - six - } { + two + } times after the loan is first made; or
{ - (7) Make a new loan, secured by a title, to a consumer on
the same day that a previous loan, secured by the same title,
expires if the lender has renewed the previous loan six times.
The lender shall wait at least until the next day after the
expiration date of the previous loan before making the new loan
to the consumer. - }
{ + (j) Make a new title loan to a consumer within seven days
of the date on which a previous title loan expires.
(2)(a) A lender in the business of making title loans may not
charge the consumer more than one fee per loan transaction for
dishonored checks or insufficient funds, regardless of how many
checks or debit agreements the lender obtains from the consumer
for the transaction. The fee may not exceed $20.
(b) A lender in the business of making title loans may not
collect a fee for a dishonored check under ORS 30.701 or seek or
recover statutory damages and attorney fees from a consumer for a
dishonored check under ORS 30.701. The lender may recover from
the consumer any fee charged to the lender by an unaffiliated
financial institution for each dishonored check. For a dishonored
check or insufficient funds, the fees described in this
subsection are the only remedy a lender may pursue and the only
fees a lender may charge. + }
SECTION 3. ORS 725.340, as amended by section 2, chapter 3,
Oregon Laws 2006, is amended to read:
725.340. (1) Except as provided in ORS { + 725.615 and + }
725.622, a licensee may charge, contract for and receive any
interest or consideration for loans, secured or unsecured, as
agreed upon by the licensee and the borrower.
(2) When a precomputed loan contract is originally scheduled to
be repaid in 62 months or less and requires repayment in
substantially equal or consecutive monthly installments of
principal and interest combined, the interest or consideration
may be precomputed, contracted for and earned on scheduled unpaid
principal balances on the assumption that all scheduled payments
will be made when due. In such cases, every payment may be
applied to the combined total of principal and precomputed
interest until the contract is fully paid, and the acceptance or
payment of interest or consideration on any loan made under the
provisions of this subsection is not considered to constitute
payment, deduction or receipt thereof in advance. The precomputed
interest or consideration is subject to the following
adjustments:
(a) When a default of more than 10 days in the payment of any
scheduled installment occurs, the licensee may charge and collect
a default charge not exceeding five percent of the unpaid amount
of the installment or $5, whichever is less. A default charge may
be collected only once on an installment, but may be collected at
the time it accrues or at any time thereafter. A default charge
may not be assessed with respect to an installment which is paid
in full on or within 10 days after a scheduled installment due
date when an earlier maturing installment or a default or
deferral charge on an earlier maturing installment may not have
Enrolled House Bill 2204 (HB 2204-B) Page 3
been paid in full even though all or part of such installment
payment is applied to an earlier maturing installment, or a
default or deferral charge.
(b) If the payment of all unpaid installments is deferred one
or more full months, and if the contract so provides, the
licensee may charge and collect a deferral charge not exceeding
the annual percentage rate previously disclosed to the borrower
pursuant to the Federal Consumer Credit Protection
(Truth-in-Lending) Act applied to the sum of the installments
deferred for the length of the deferral period. The deferral
period is that period in which no scheduled installment is
required to be paid by reason of the deferral. The charge may be
collected at the time of deferral or at any time thereafter. A
deferral charge may not be made for the deferral of any
installment with respect to which a default charge has been
collected, unless the default charge is deducted from the
deferral charge. If prepayment of the loan in full occurs during
the deferral period, in addition to any other rebate which may be
required, the borrower shall receive a rebate of the portion of
the deferral applicable to the unexpired months in the deferral
period, for which purpose a fraction of an unexpired month
exceeding 15 days is considered to be a month.
(c) Upon prepayment in full of the unpaid balance of a
precomputed loan, a rebate of unearned interest or consideration
shall be made as provided in this paragraph. The amount of the
rebate shall be not less than the total interest contracted for
to maturity, less the greater of:
(A) Ten percent of the amount financed or $75, whichever is
less; or
(B) The interest or consideration earned to the installment due
date nearest the date of prepayment, computed by applying the
simple interest rate of the loan to the actual principal balances
outstanding, for the periods of time the balances were actually
outstanding. For purposes of rebate computations under this
subparagraph, the installment due date preceding the date of
prepayment is considered to be nearest if prepayment occurs 15
days or less after that installment date. If prepayment occurs
more than 15 days after the preceding installment due date, the
next succeeding installment due date is considered to be nearest
to the date of prepayment. In determining the simple interest
rate, the licensee may apply to the scheduled payments the
actuarial method, by which each scheduled payment is applied
first to accrued and unpaid interest or consideration, and any
amount remaining is applied to reduction of the principal
balance.
(3) If the borrower agrees to perform certain duties to insure
or preserve the collateral and fails to perform those duties, the
licensee may pay for the performance of those duties and add the
amounts paid to the unpaid principal balance. A charge may be
made for sums advanced, at the rate provided for in the loan
agreement.
(4) The loan contract may provide that after default and
referral the borrower shall pay the licensee for reasonable
attorney fees actually paid by the licensee to an attorney not a
salaried employee of the licensee.
SECTION 4. { + The amendments to ORS 725.600 and 725.615 by
sections 1 and 2 of this 2007 Act apply to title loans that are
made, entered into or renewed on or after July 1, 2007. + }
SECTION 5. { + This 2007 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
Enrolled House Bill 2204 (HB 2204-B) Page 4
is declared to exist, and this 2007 Act takes effect on July 1,
2007. + }
----------
Passed by House February 13, 2007
Repassed by House June 5, 2007
...........................................................
Chief Clerk of House
...........................................................
Speaker of House
Passed by Senate June 1, 2007
...........................................................
President of Senate
Enrolled House Bill 2204 (HB 2204-B) Page 5
Received by Governor:
......M.,............., 2007
Approved:
......M.,............., 2007
...........................................................
Governor
Filed in Office of Secretary of State:
......M.,............., 2007
...........................................................
Secretary of State
Enrolled House Bill 2204 (HB 2204-B) Page 6