Mandatory ELT: The New Trend

Here at Decision Dynamics' headquarters, we've been noticing a trend in electronic lien and title (ELT) programs. Not only are more states developing or revamping their programs, but the number of states requiring participation is on the rise.

• Pennsylvania: July 2008
• Louisiana: January 2010 (grace period ended June 30, 2010)
• Arizona: May 31 2010
• Nebraska: January 2011 (participation not mandatory, but no titles with liens will be printed)
• California: January 2012

In addition, both South Carolina and Massachusetts had mandatory-ELT legislation introduced in 2009-2010 that has not yet passed.

In April, Automotive news published a story by Jim Henry on this issue headlined "E-titles and e-liens slowly e-liminating paper docs". I'm quoted:

Not only is it more convenient, but also in past, electronic made everybody nervous. "If I've got it on paper it's real." But the way we store data now there's an electronic trail and it's more reliable than paper titles.

The mandatory participation requirement for ELT is also forcing lenders from across the nation to participate. With more states poised to require participation, this trend will continue to gain momentum. And that's good.

Image entitled "Never Easy Going Up" by Lachlan McDonald

Changes to the Repossession Process in Florida

To: Florida ELT Participants

Please read about these important changes to the repossession process in Florida. To assist ELT participants in complying, the FL DHSMV has asked us to solicit feedback concerning the possibility of enhancing the ELT system to process repossession applications and fees. Let me know if you are interested in being able to process repossession applications electronically. DDI is committed to providing all the electronic features the states make available to streamline all aspects of your title processing and is eager to provide these services in Premier eTitleLien™.

Ann Gunning
Chief Information Officer
Decision Dynamics, Inc.

From FL DHSMV:

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HB 971 passed during the 2010 session and is effective July 1, 2010. It amends the Florida Statutes by providing that any lienholder who has repossessed a motor vehicle in Florida in compliance with the provisions of section 319.28, Florida Statutes must apply to a Tax Collector’s office in Florida or to the department for a certificate of repossession or for a certificate of title pursuant to section 319.323, Florida Statutes. Any person found guilty of violating any requirements of the law shall be guilty of a felony of the third degree, punishable as provided in section 775.082, section 775.083 or section 775.084, Florida Statutes. The department requests your assistance by notifying the lienholders under contract with you of this law change and its ramifications. Please send them the attached Memo from Director Ford and HB 971.

Pursuant to section four of the Electronic Lien and Title Program Memorandum of Understanding between Third Party Providers, Business Partners and the Department, these agreements are subject to any restrictions, limitations or conditions enacted by the Florida Legislature. If you have any questions, please contact the Bureau of Titles and Registrations at 850-617-3001.

Gary Elmore
Motorist Services, Strategic Support Services
Department of Highway Safety and Motor Vehicles

Director Ford Memo
HB 971

Nebraska Electronic Liens and Titles Q&A Updated

The Nebraska Department of Motor Vehicles updated their Electronic Lien and Title Questions/Answers document last week. Most significantly, they reaffirmed the timetable for implementing the ELT program:

• Pilot with 1 service provider - September (4 to 6 weeks);
• Participation open to all service providers - Mid-October;
• Full Implementation of all Service Providers - November;
• Mandated Date for ELT availability - January 1st.

Decision Dynamics is of course ready to go whenever the state is. (We've been pretty impressed by the state's program - more on the specifics later.)

To read the Q&A for yourself: Electronic Lien and Title Questions/Answers on the Nebraska site
and our mirror.

Arizona Mandatory ELT Program Impacting Lenders In All States

When the Arizona program went mandatory this past May 31, 2010, two things happened:

1. The Arizona DOT Motor Vehicle Division stopped printing titles with liens
2. MVD and 3rd party offices began requiring lienholders to be active participants in the ELT program before they would accept a Title and Registration Application listing that lender as the lienholder.

The only exceptions to this program are for mobile home liens and for individuals desiring to be lienholder.

We did expect the broad impact this has had, from traditional lenders (banks and credit unions) to dealers providing financing and even non-lenders like bail bond companies. Arizona has been very consistent in enforcing participation in the ELT program.

In addition to the large number of Arizona lenders, we have been getting calls from around the country. I spoke with callers just today from Illinois, New York, and Maine. Any lender with a customer in or moving to Arizona is being required to sign up with an ELT service provider like DDI.

Reactions to the news that they have to find a provider and register as a lienholder varies. Some lenders are so unhappy with having to comply with something new they refuse to offer loans on vehicles titled in Arizona. (Bad news if you're transferred there and your lender won't let you title your car.) Others seem unfazed.

ELT is increasing in popularity, not decreasing, as more states implement new programs and require participation.

Image: Cactus4 by Fishing Cactus

More Dealer Title Fraud, This Time in Utah

The Herald Journal has an excellent write up* of another case of auto dealers accused of failing to pay off loans and properly recording vehicles. They include a good summary of the consequences for car owners:

The suspects are also accused of not paying off existing loans on trade-in vehicles. Roberts said the Campbells were falsely representing that they were paying off loans from trade-in vehicles.

“The finance companies were paying the money but it was not going to pay off the loans,” he said. “So the person who did a trade-in would have not one problem but two problems. The first problem is that their bank or finance company still wants money for the (traded) car, the second problem is they have a vehicle that they do not have title to so if they wanted to sell it, they could not.”

This is similar to other title fraud situations we've reported on previously here and here and one of the reasons we encourage lenders to use ELT.

The state of Utah does offer an Electronic Lien Transfer program. Because the program is currently administered solely by the state, DDI is currently unable to link Premier eTitleLien™ to Utah. Stay tuned...

* 1/29/2010: Former auto salesmen charged

Image: Sad Car :( by Félix Adorno

Changes Caused by Electronic Liens and Titles

Participating in a Electronic Liens and Titles (ELT) program (offered by several states) changes the way titles are managed, but not in the way most people expect. The biggest example of this is the title application (application + old title + fee + whatever other forms required by the state). Most people on hearing that an electronic title program is in place assume that the electronic title can be applied for electronically, since logically a "going digital" program means eliminating paper. Sadly, this is not the case with *any* ELT programs so far (mostly*). Title applications must still be submitted with physical owner signatures or limited power of attorney forms.

What ELT Does Not Change

• Liens are still recorded as part of vehicle collateral for loans.
• The lien is still recorded by the DMV.
• Applications for liens are still required (as mentioned above) since physical signatures are required to meet Federal odometer disclosure laws.
• Forms and processes for related actions (owner address change, vehicle reposession, mobile home de-titling, etc.) remain the same.

What ELT Changes

• Lienholders do not receive a paper title.
• Liens must be released electronically (in many ELT states).
• Titles are mailed to owners by the DMV.

Non-Obvious Improvements
I can hear you thinking now: "What good is that? That doesn't help nearly enough!" We've heard that before. This subtle change to a paperless title makes a big difference in business processes, greatly helping lenders, states, and vehicle owners. Titles cannot be misfiled. Owners who misplaced lien-released-on-the-face titles can request duplicates from the DMV. No title mail to open, no titles to mail out.

Premier eTitleLien™ Extras
Our solution allowing lenders to work with state ELT programs helps make the most of these benefits and more. Title applications are tracked until lien is perfected. Information on new electronic titles (owner name, odometer) is checked against the application for accuracy. State title inquiry services are used along with NADA or Blackbook values to verify vehicle status prior to issuing a loan. There's more at http://www.etitlelien.com.

* Ohio does allow lenders to electronically notate a lien for an existing title when no transfer of ownership occurs. Yay Ohio!

Image from Dalit Freedom Network

What to Ask Your DMV to Include in the ELT Program

DDI's Premier eTitleLien™ now works with the Electronic Liens and Titles (ELT) programs in eight states: Florida, Georgia, Louisiana, Ohio, Pennsylvania, South Carolina, Texas, and Virginia. (We're putting the finishing touches on our participation in Arizona, California, and Washington.)

We are dependent on the "features" provided by each state DMV in order to include that feature in Premier eTitleLien™ and make it available to our customers. For example, only about half the states with an ELT program support converting existing paper titles to electronic titles. If they don't offer a feature, we can't offer it either.

And if they don't offer an *important* feature, everybody loses out. Lenders can't (or won't) participate because the program either doesn't work or makes titling harder. Lack of participation means the state sees no cost savings. And vehicle owners miss out on benefits to them.

When we hear that a state is actively investigating ELT (like Nebraska), we want to give them as much information as we can, in the hope that they include all the features lenders, especially in-state lenders, need. We've put together a website (AllAboutTitles.com - a work in progress) that gives some information about ELT, including white papers on

• the value of a title check
• considerations for converting paper titles to electronic
• and our recommendations for what should be part of an ELT program

We also have some technical details about messages and communications, plus relevant legislation affecting ELT programs in each state.

Lenders: Want an easier time managing titles with liens? Want to know what you're missing? Check out our suggestions for what should be included in an electronic liens and titles program. If you're our customer, let us (or our user group) know what you'd like to see implemented. If not and you're in an ELT state, contact your DMV or local lender association (like a banker's association) with your suggestion. Feel free to send them our ideas.

Image: Help is on the way, elevator, Chicago Tribune, Chicago, IL by gruntzooki