Fifteen examiners from the Illinois Department of Financial and Professional Regulation and the Department’s Acting Secretary, Brent Adams, spread out across the state of Illinois to examine the loan records of customers borrowing money against the value of their personal vehicles. The new rules are intended to reduce the likelihood that a customer will default on his or her loan and have their car repossessed, and establish a database to prevent borrowers from being forced to take out additional loans to repay outstanding balances.
“Passing a law is only the first step toward protecting consumers from predatory lenders. The next step is to ensure that both the letter and the intent of the law are being followed,” said Acting Secretary Brent Adams, when he ordered the compliance check. “Families struggling to keep up with loan payments deserve to know that Illinois lenders are following the rules.”
The examiners will visit title lenders and review randomly selected loan files opened after April 1, 2009, when the new rules took effect. The files will be audited to make sure that:
► The principal amount of a title loan cannot exceed $4,000 and that the loan payments do not exceed 50 percent of the borrower’s gross monthly income.
► There are no balloon payments; title loans must be repayable in substantially equal installments.
► Each loan agreement includes a signed statement by the borrower attesting that they have not had an outstanding title-secured loan within the preceding 15 days.
► Any notice of delinquency or default sent or given to the consumer contained the Department’s hotline telephone number.
► No cars have been repossessed and leased back to the consumer.
Once the compliance sweep is completed, the Department will carefully review the findings and conduct in-depth investigations of any companies that fail to comply with the new regulation’s consumer protection provisions.
To review the text of the rule, click here.
