BILL NUMBER:  S5152

 TITLE OF BILL :  An act to amend the personal property law, in
relation to loan assignees

 PURPOSE:

This bill slightly increases liability on loan assignees in automobile
financing transactions by providing that plaintiffs who prevail in
cases against assignees in automobile transactions may be entitled to
attorney's fees exclusive of caps on assignee liability, at the
court's discretion.

 SUMMARY OF PROVISIONS:

Section 1: Amends Subdivision 9 of section 302 of the personal
property law to specify that attorney's fees are exclusive of any cap
on suits against loan assignees, and authorizes courts to award
attorney's fees in these cases to prevailing plaintiffs.

Section 2: This act shall take effect on the first of January next
succeeding the date on which it shall have become a law.

 EXISTING LAW:

Under current law, assignees generally have their liability capped to
              

the buyer's amount owing to the assignee.

 JUSTIFICATION:

In many cases, consumers are defrauded by auto dealerships who create
fraudulent loan applications stating false income levels or employment
histories. Consumers are then stuck with auto loans they could have
never been expected to afford and must then sue auto dealerships to
become financially whole. In some cases, dealerships close their doors
and default on these obligations, and lenders associated with the
dealerships turn a blind eye to this fraud and consumer abuse.

Banks and lenders in automobile transactions have heavy involvement in
creating the terms under which these contracts are executed, and
enable dealers to transact business by providing routes of financing.
Even though they are technically assignees because the dealer executes
the financing contract, the dealer very quickly sells the note to the
assignee, and the banks and financing companies are de facto lenders
in these transactions. Lender liability is limited under the assignee
rule in the Motor Vehicle Retail Instalment Sales Act. Thus, consumers
are left to recover from dealerships (who sometimes shut their doors
or default), even when, in some cases, lenders are complicit with
fraud. By making attorney's fees exclusive of the normal cap on
assignee liability, consumers will be able to access legal counsel in
more cases where auto dealers have engaged in fraud, and banks that
purchase auto loans will be more careful about monitoring lending
practices and the legitimacy of loan applications.  Due to increased
liability, lenders who are aware of and complicit with auto loan fraud
will now have a strong disincentive to continue working with abusive
and predatory dealerships.

 LEGISLATIVE HISTORY:

2015-16 Session - new bill S.5506 - passed Senate both Sessions

 FISCAL IMPLICATIONS :

None.

 EFFECTIVE DATE:
This act shall take effect on the first of January next succeeding the
date on which it shall have become a law.