The Arizona Legislature Failed to Act on Car Title Loan Reform Bills in 2021
Three House bills were introduced in the 2021 Arizona Legislature to reform high-cost predatory car title lending. None of these bills was heard by a committee or moved forward in the 2021 legislative session.
Butler, Rodriguez
Final disposition: Held in Committees.
Loans made under these terms could also be made in the Regulatory Sandbox Program.
Bolding, Rodriguez, and Salman
Final disposition: Held in Committees.
Title loans would not be permitted in the Regulatory Sandbox Program. Cash loans secured by a vehicle would be subject to the Consumer Lender law in Title 6, Chapter 5.
Salman, Andrade, Cano, Hernandez M, Rodrigues, Stahl Hamilton
Final disposition: Held in Committees.
Amends Title 44, Chap 2.1 to replace the terms of the Secondary Motor Vehicle Finance Transaction (title loan) law with the protections of the Arizona Fair Lending Act ballot language.
Limits loans to up to $5,000 for terms up to four years.
Caps rates at 36% including fees and ancillary products.
Requires loans to be secured by a clear title to the borrower’s vehicle.
Prohibits balloon payments, prepayment penalties, required access to borrowers’ bank accounts.
Loans made under these protections could also be made in the Regulatory Sandbox Program. Larger or longer-term cash loans secured by the borrower’s vehicle would be subject to the Consumer Lender law
Department of Insurance and Financial Institutions Omnibus Bill
Livingston
Final disposition: Approved by the Governor May 10, 2021.
The legislature enacted this ~300-page bill to rewrite much of Title 6 and other provisions for the new Department of Insurance and Financial Institutions without improving consumer protections. Amendments were proposed but rejected:
Instead of raising the size of loans subject to the Consumer Lender law (from $10,000 to $50,000) with stepped down maximum rates for the largest loans, SB 1463 was amended to keep the maximum loan size at $10,000.
Mary Ryan, a board member of the Center for Economic Integrity, testified to the House Government & Elections committee on March 25, 2021.
Military Lending Act Bill
Butler, Andrade, DeGrazia, Lieberman, Powers Hannley,
Rodriguez, Stahl Hamilton
Final disposition: Held in Committees.
Federal law protects active-duty servicemembers and their families from high-cost predatory lending but Arizona does not enforce the law with state-licensed lenders. The bi-partisan Military Lending Act (MLA) was passed by Congress during the Bush Administration to protect military readiness and took effect in 2007. The MLA (10 U.S.C. Sec. 987 and Department of Defense rules at 32 C.F.R Part 232) prohibits payday and car title lending to covered military borrowers and caps rates for covered credit at 36% including fees and ancillary products.
The MLA is enforced at the federal level by bank regulators, the Consumer Financial Protection Bureau (CFPB) and the Federal Trade Commission. States do not enforce the MLA unless state laws specifically allow it. HB 2272, introduced by Rep. Kelli Butler, would have empowered Arizona to protect active-duty service members and their dependents from predatory lending by enforcing the federal Military Lending Act.
HB 2272 would not have added any new requirements to lenders subject to the MLA. It would simply have empowered Arizona to enforce the law to protect active-duty servicemembers and their families from abusive credit.
The Arizona Legislature
in 2021
Arizona’s 55th Legislature, First Regular Session convened on Monday, January 11, 2021 and adjourned sine die on Wednesday, June 30, 2021 after 171 days.
2021 Progress of Bills
2021 CEI Bill Tracking Datasheet
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“Laws, like sausages, cease to inspire respect in proportion as we know how they are made,” wrote lawyer-poet John Godfrey Saxe.
Civic Engagement Beyond Voting's Melinda Iyer penned a comprehensive update on the legislative session, as their final weekly update.