RSA 361-A and HB1243 FAQ
Frequently Asked Questions for motor vehicle retail sellers and sales finance companies regarding HB1243 and RSA 361-A
1. Does RSA 361-A prohibit a retail seller from charging an “administrative fee” (sometimes referred to as an “administration fee” or “admin fee”) in connection with a retail installment transaction?
If the administrative fee is in the nature of a tax, registration fee, license fee, or other fee and the administrative fee is charged by the retail seller on every motor vehicle sale, regardless of whether the sale is for cash or subject to a retail installment contract, RSA 361-A does not prohibit the retail seller from charging such a fee in connection with a retail installment transaction. However, the administrative fee may not be charged in a way that constitutes an unfair method of competition or an unfair or deceptive act or practice.
2. Can the notice required by RSA 361-A:15, IX and RSA 361-A:16, IX be included as an addendum to the retail installment contract until such time as company forms are fully updated?
An addendum shall be permitted provided that the consumer indicates that it has been read, either electronically or in print.
3. Does the assignment from the dealer to a financial company purchasing the retail installment contract prior to first payment trigger a notice pursuant to RSA 361-A:20, I?
Yes. Generally speaking, the provisions of RSA 361-A should be read in favor of providing notice to consumers after any transfer.
4. What do the terms “principal”, “total interest charged for the period of such loan”, and “nature of the security” mean for purposes of RSA 361-A:20, VII?
“Principal” means the current, unpaid balance of loan amount agreed to on the retail installment contract and excludes any late fees, interest, or other charges that may be assessed or owed after the retail installment contract has been executed. “Total interest charged for the period of such loan” means the interest for the period covered by the current payment, not the interest for the life of the loan. “Nature of the security” means the year, make, and model of the vehicle that is the subject of the retail installment contract.
5. (a) What does the term “ancillary product” mean for purposes of RSA 361-A:20, VIII; and (b) When does the 21 calendar day countdown begin for purposes of RSA 361-A:20, VIII (a); and (c)Who is responsible for the refund contemplated in RSA 361-A:20, VIII(c)?
(a) “Ancillary product” means a secondary service that is purchased in addition to and in support of the vehicle subject to the retail installment contract. The term may include but is not limited to extended warranties, service contracts, and credit protection contracts. Guaranteed asset protection contracts and waivers are governed by other sections of RSA 361-A as well as RSA 361-E.
(b) The 21 calendar days begins on the date any ancillary product is canceled, pursuant to RSA 361-A: 20, VIII(b). In the event an ancillary product provides coverage beyond the length of the retail installment contract, the requirements for cancellation and refunds shall be governed by the terms of the ancillary contract itself and negotiated between the buyer and the provider of services under the ancillary product contract.
(c) Pursuant to RSA 361-A:20, VIII(c), in the event an ancillary product is cancelled or a triggering event occurs, the holder of the contract is required to provide notice to the provider of services under the ancillary product contract. The holder shall provide a copy of the notice to the buyer of the vehicle or shall mail the notice to the buyer’s last known address. The provider of services is then responsible for issuing any applicable refunds pursuant to the terms of the agreement.
6. Securitization trusts are trusts established for the purpose of pooling retail installment contracts and reconstituting them into securities. Are securitization trusts required to obtain a sales finance company license under RSA 361-A:2?
No, they are not required to obtain a sales finance company license. The licensing requirement will typically be fulfilled by the servicer or other entity responsible for servicing the contracts in the securitization trust.
7. Please confirm that sales finance company licenses held by entities engaged only in taking assignments of closed-end motor vehicle leases may be surrendered.
Yes. HB 1243 removed motor vehicle leases from the Banking Department’s regulatory authority. Motor vehicle leases remain subject to regulation under RSA chapter 361-D, which is a non-banking law that expressly governs motor vehicle leasing. RSA 361-D:27 states: “In addition to the private rights created by this chapter, compliance with the requirements imposed under this chapter shall be enforced by the [New Hampshire] [D]epartment of [J]ustice.”
8. What is the Banking Department’s no-action process relating to HB 1243?
The no-action process is a review process through which the Department’s staff advises financial institutions on whether it would likely recommend enforcement action if the institution fails to take a specified action. Financial institutions impacted by HB 1243 may choose to submit a no-action request to resolve implementation concerns as they relate to the Banking Department’s regulatory authority.
As a general matter, the Banking Department requires that no-action requests include (a) the name of the institution on whose behalf the request is being made, and the names of any other entities or persons involved; (b) a detailed summary of the particular facts and circumstances giving rise to the request; and (c) the institution’s opinion on the matter and the legal basis for its opinion. The requester should identify the specific provisions of HB 1243 from which it is seeking no-action relief and should provide a detailed statement of the specific operational challenges that the institution is facing as well as the ongoing efforts being made by the institution to achieve compliance with HB 1243. The Department’s staff will respond to such requests as expeditiously as possible, and our staff may request additional information if it deems it necessary to respond to the request. Please bear in mind that responses to such requests do not constitute legal advice. For any institution that wishes to pursue a no-action request, the submission should be emailed to nhbd@banking.nh.gov.
9. Are no-action requests relating to HB 1243 confidential?
Whether a no-action request is confidential is governed by New Hampshire’s Right-to-Know Law, RSA 91-A, and any other confidentiality law that may be applicable to a particular request, including RSA 383:10-b. The Right-to-Know Law sets forth the process for obtaining the governmental records of public bodies and agencies in New Hampshire. If the submitter of a no-action letter requests confidential treatment, the Banking Department generally does not respond to such a request until the Department actually receives a records request seeking disclosure. If the Department were to receive a records request for a no-action request and/or any response, the Department—at that time—would determine the validity of a submitter’s request for confidential treatment of any of the subject records. The decision to release or withhold governmental records lies with the Department, although a determination on whether a particular record becomes public may ultimately be decided by a court.
10. What does the term “time balance” mean as that term is used in RSA 361-A:15 and RSA 361-A:16?
“Time balance” is the total amount owed on the loan, calculated as either (a) the amount of one installment payment multiplied by the number of payments due on the contract (assuming all payments are made on time) or (b) the total amount owed when accelerated if defaulted.
11. RSA 361-A:15, IX and RSA 361-A:16, IX provide: “The retail installment contract shall include a notice, printed in type size equal to at least 10- point type, stating that the consumer may file a complaint with the commissioner along with the department’s contact information.” Is there specific contact information or language that should be used for the notice required by these statutes?
The notice must at least contain the statutorily required information. For example, the following notice is considered acceptable:
NOTICE OF RIGHT TO FILE A COMPLAINT:
NH RSA 361-A governs retail installment contract requirements in New Hampshire. This agreement is a retail installment contract. You may file a complaint with the State of New Hampshire Banking Department regarding conduct that may violate any provisions of RSA 361-A or administrative rules adopted under the authority of RSA 361-A.
The contact information for the State of New Hampshire Banking Department is:
Email: legal@banking.nh.gov
Phone: 603-271-3561
Mail: State of NH Banking Department, 53 Regional Drive, Suite 200, Concord, NH 03301
12. What is the difference between the definition of “cash sale price” in the new version of RSA 361-A versus the old version of RSA 361-A?
RSA 361-A:1, IV now defines “cash sale price” as the price at which the retail seller offers in the ordinary course of business to sell for cash the motor vehicle that is the subject of the retail installment contract. HB 1243 was intended to simplify the definition of “cash sale price” without changing the meaning of the statute. Thus, the “cash sale price” may continue to include (as was permissible under the prior version of RSA 361-A) taxes, registration, license and other fees, and charges for accessories and their installation and for delivery, servicing, repairing, or improving the motor vehicle that are offered by the retail seller in the ordinary course of business.
13. RSA 361-A:15, IV (pertaining to indirect loans) and RSA 361-A:16, IV (pertaining to direct loans) require the retail installment contract to contain a calculation that includes, among other things, “[t]he amount, if any, paid to the borrower,” “[t]he description and amounts, if any, of prepaid finance charges,” and “[t]he total of prepaid finance charges.” Do these provisions require the retail installment contract to contain line items for amounts paid to the borrower or prepaid finance charges in cases where the retail installment transaction does not include any such payments or charges?
No. While it is permissible for the retail installment contract to contain line items for amounts paid to the borrower and prepaid finance charges indicating that these payments/charges are $0 in such cases, it is not required by RSA 361-A:15, IV or RSA 361-A:16, IV.
14. Are securitization trusts considered “holders” for purposes of RSA 361-A:20, I?
No, securitization trusts shall not be considered “holders” for purposes of RSA 361-A:20.