BILL ANALYSIS
AB 1515
Page 1
Date of Hearing: April 27, 2009
ASSEMBLY COMMITTEE ON TRANSPORTATION
Mike Eng, Chair
AB 1515 (Eng) - As Amended: April 14, 2009
SUBJECT : Vehicle lien and title documents
SUMMARY : Requires the Department of Motor Vehicles (DMV) to
develop, on or before January 1, 2012, an Electronic Lien and
Title (ELT) Program, in cooperation with lienholders, to require
that all lien and title information be held in an electronic
format, provided that the program is cost effective compared to
the current paper title and registration system.
EXISTING LAW :
1)Requires DMV, upon registering a vehicle, to issue a
certificate of ownership to the legal owner and a registration
card to the owner, or both to the owner if there is no legal
owner of the vehicle.
2)Requires the certificate of ownership to contain the date
issued; the name and residence or business address or mailing
address of the owner and of the legal owner, if any; the
registration number assigned to the vehicle; a description of
the vehicle as complete as that required in the application
for registration of the vehicle; and provision for: notice to
DMV of a transfer of the title or interest of the owner or
legal owner, application for transfer of registration by the
transferee, and an odometer disclosure statement.
FISCAL EFFECT : Unknown
COMMENTS : According to the author, California has for the last
two decades had a voluntary ELT system whereby DMV sends an
electronic message to participating lienholders instead of using
a paper title. The program is believed to provide significant
cost savings benefits to lienholders as well as DMV. However,
is being utilized by only about 20% of lienholders.
This bill therefore seeks to expand the use of ELT by requiring
all lien and title information to be held in an electronic
format, provided DMV determines it is cost effective to do so.
AB 1515
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ELT is purported to reduce DMV's costs by virtue of its
replacing paper titles with electronic data, eliminating the
data entry and processing of inbound title work to remove the
first lien and issue a clean title, reducing the data entry and
processing of duplicate title applications resulting from lost
paper titles, reducing the issuance of replacement paper titles
to lienholders, and reducing the chance for fraud by eliminating
paper documents that can be compromised.
Conversely, ELT can reduce lienholders' costs associated with
activities such as the manual receipt of inbound paper titles,
matching titles to loan or lease data, storage of titles,
retrieval of titles from file vaults, and execution of lien
release and mailing of titles upon lien satisfaction. According
to supporters, who provide electronic lien handling services on
a commercial basis for lienholders, "The benefits to lienholders
are reduction in work effort, lower cost, no storage
requirements, no postage and better customer service by avoiding
lost titles since ELT cannot by lost. Much like e-mail has
replaced written letters, ELT is eliminating paper titles. The
average cost for tracking, handling and storing a title can
range from $8 to $12. Using ELT can bring this figure down to
about $2 per title."
While this bill could be construed as creating a market for the
sponsor, it should be noted that there are at least three firms
currently offering this service, enactment of the bill would
surely spur the establishment of additional firms, and
lienholders could choose to perform these tasks with their own
personnel.
Suggested Committee amendments : 1) Smaller lenders are likely
to incur higher expenses with filing and releasing electronic
liens since ELT pricing is typically based on volume. Mandatory
requirements may reduce the number of low-volume banks and
credit unions in the auto loan marketplace due to higher costs
making them less competitive. The bill should therefore be
amended to authorize DMV to establish a business volume
threshold under which participation in the ELT program would not
be mandatory. 2) Some vehicle owners who either pay off their
auto loans or buy their vehicles outright may not have the
capability of receiving an electronic copy of their certificate
of title as they may not have internet access or an established
e-mail account. In order to allow vehicle owners not subject to
liens to possess a paper copy of their title certificates, the
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bill should be amended to replace the phrase "all lien and title
information" with the phrase "all lienholders' title
information." 3) The bill's current language requires DMV to
establish an ELT program if "the program is cost effective
compared to the current paper title and registration system."
However, this provision does not specify what entity would make
that determination. The bill should therefore be amended to
specify that the cost-effectiveness evaluation would be
performed by DMV. 4) The bill's reference to "in cooperation
with lenders" could be interpreted to mean that DMV must achieve
consensus among all prospective lienholders. The term
"cooperation" should therefore be changed to "consultation."
REGISTERED SUPPORT / OPPOSITION :
Support
VINtek (sponsor)
Opposition
None received
Analysis Prepared by : Howard Posner / TRANS. / (916) 319-2093