Keep Watch on These Bills Affecting Consumer Financial Services

Florida legislators are weighing four proposals that could impact the industry

Florida’s 2018 legislative session is underway, which means that for the next few weeks, Florida’s lawmakers will vote on new laws and requirements that could potentially have an impact on the consumer financial services industry.

As is the case every year, there are a few proposals that warrant special attention and should be closely monitored throughout the remainder of the session. Here are some of the industry-related bills that you may hear more about as the legislative session continues to move forward.

Mortgage lending

SB 894/CS-HB 935: Mortgage Lending

Florida currently imposes licensure and regulatory requirements on various aspects of non-depository mortgage businesses, including mortgage loan originators, mortgage brokers, and mortgage lenders. Unless otherwise exempted, a person acting in such capacity must be licensed if the person takes part in making a “mortgage loan.”

For residential mortgage loans, licensure is currently required if the mortgage is primarily for personal, family, or household use. Licensure is not required where the residential mortgage loan is made for a business purpose and is secured by a residential structure containing one to four units.

SB 894/CS-HB 935 proposes to amend the definition of “mortgage loan” to provide that a residential mortgage loan made for a business purpose will fall under the definition of a “mortgage loan.” As a result, persons originating, brokering, or lending business purpose residential mortgage loans would be subject to licensure by the Office of Financial Regulation, unless otherwise exempt.

The bill also provides a definition of the phrase “hold himself or herself out to the public as being in the mortgage lending business,” as used in two exemptions provided in Chapter 494.

Although the traction of SB 894/CS-HB 935 is uncertain, it should be noted that in the 2017 legislative session, Governor Scott vetoed a bill that was substantially similar to SB 894/CS-HB 935.

Small-dollar lending

SB 640/HB 747: Consumer Finance Loans

Currently, under the Florida Consumer Finance Act (which sets forth licensing requirements for consumer finance lenders and the terms and conditions under which a consumer finance loan is allowed in Florida), licensed consumer finance lenders are permitted to make loans in amounts of up to $10,000 at a rate of 30 percent.

SB 640/HB 747 proposes to establish the Access to Responsible Credit Pilot Program, which would authorize program licensees to make consumer finance loans of at least $300 and no more than $10,000, at a maximum fixed interest rate of 36 percent per year. The bill would also allow program licensees to engage in certain arrangements with referral partners and receive referral compensation.

While SB 640 has moved quickly through its assigned committees in the Florida Senate, its companion bill, HB 747, hasn’t been heard in any assigned committees, as of the time of publication of this blog post.

Bank distribution of assets upon death of depositor

SB 892/ HB 1241: Financial Institution Payments to Surviving Successors

SB 892/HB 1241 proposes to authorize a financial institution to pay to a surviving successor of a decedent depositor the funds in the decedent’s deposit accounts and certificates of deposit if the sum does not exceed a $10,000. This authorization would not require a court order or judgment authorizing the payment. As a result, a surviving successor would not need to open a Florida probate estate and obtain judicial appointment as the decedent depositor’s personal representative in order to retrieve funds contained in the account.

The bill defines the term “successor” to include the surviving spouse, adult child of the decedent or the parent of the decedent. The bill would require the surviving successor to provide the financial institution with a copy of the decedent’s death certificate, as well as an affidavit attesting that the successor is entitled to the payment of the deceased’s deposit accounts.

Neither SB 892 nor HB 1241 has been heard in any assigned committees, as of the time of publication of this blog post.

Use of credit reports by insurers

SB 414: Use of Credit Reports and Scores for Motor Vehicle and Residential Insurance

Insurance carriers are currently permitted to use credit reports and credit scores for underwriting and rating purposes with regard to personal lines motor vehicle insurance and personal lines residential insurance. Personal lines motor vehicle and residential insurance includes insurance for homeowners, mobile homeowners’ dwelling, tenants, condominium unit owners, cooperative unit owners, and similar types of insurance.

SB 414 proposes to prohibit insurers from requesting or using credit reports or credit scores of applicants or insured persons for underwriting or rating purpose as to personal lines motor vehicle insurance. The bill also prohibits insurers from taking an adverse decision against an applicant or an insured person, based, in whole or in part, on his or her credit report or credit score.

So far, no companion bill to SB 414 has been filed in the Florida House. Unless a companion bill to SB 414 is filed in the Florida House, SB 414 will not pass the legislative process.

Stay tuned for updates

We’ll be following all of these bills very closely throughout the remainder of the session and will keep you informed of any changes to the provision of consumer financial products and services in Florida. To learn more about current requirements related to consumer financial services compliance, contact me or another member of Kaufman Rossin’s banking industry team.