Summary — HB 5354 (Substitute H‑1)
Subject: Amendments to the Motor Vehicle Sales Finance Act (licensing and regulation of installment motor‑vehicle sellers and sales‑finance companies)
Status / Timeline
- Introduced Nov. 14, 2023 (Rep. Phil Skaggs). Substitute H‑1 adopted Dec. 13, 2024.
- Reported favorably by committee (Insurance & Financial Services). Read 3rd time and passed by the House May 16, 2025. Companion: SB 2146.
Purpose / Intent
- Modernize and consolidate licensing, fee, bonding, oversight, and enforcement provisions governing businesses that sell or finance motor vehicles under installment contracts. Strengthens regulatory tools for the Department of Insurance and Financial Services (DIFS) and updates administrative mechanics (including use of the Nationwide Multistate Licensing System, NMLS).
Key provisions and changes
- Licensing renewal timing and deadlines
- Renewal applications due by December 1 preceding the renewal period; licenses will expire December 31 annually (changed from June 16 / July 1).
- If renewal fee not received by January 31, licensee incurs $25/day late fee up to $1,000 (max 40 days).
- Licensees must notify DIFS within 30 days of any changes to information on file.
Fee structure and funds
- Eliminates current statutory fee schedule; authorizes DIFS director to set annual license and contract fees to cover (but not exceed) anticipated administrative costs.
- Fee caps established in bill:
- Installment seller: up to $150 plus up to $50 per additional location.
- Sales finance company: up to $500 plus $50 per additional location.
- Amend existing license: up to $150.
- Annual “contract fee” per installment sale (collected by licensee and deposited into a new fund) to be set annually as a whole‑dollar amount between $2 and $5.
- Removes licensee examination fee requirement.
Bond requirements
- Eliminates the reduced bond option previously available to entities licensed under multiple acts. (Maintains requirement of larger bonds for sales finance companies — current law: $20,000 + $10,000 per additional location.)
Extended licensing
- Applicants may request an extended license period up to 4 years. Fee for extended period = annual fee × number of years. DIFS must deny extended period if required fees are unpaid.
Control‑person vetting
- Individuals who are “control persons” (e.g., ≥10% voting interest, appoint executives, or otherwise control management/policy) must submit via NMLS:
- Fingerprints for state & national FBI background check (unless the individual has resided outside U.S. for the past 10 years).
- Authorization for DIFS to receive criminal history checks.
- Personal history/experience form including independent credit report (unless no SSN), disclosures of convictions, regulatory or civil actions involving fraud, mismanagement, breach of fiduciary duty, etc.
- Evidence of compliance required with sales finance company license applications.
Use of NMLS and information sharing
- DIFS director may contract with NMLS (or similar) to collect/maintain records and process fees and may exchange information with federal agencies and other sources as directed.
Motor Vehicle Sales Finance Act Fund
- Creates a dedicated fund into which all monies and assets received under the Act are deposited. State Treasurer directs investment; DIFS is administrator for audit purposes. Money expended only upon appropriation for administration and enforcement and does not lapse to the general fund.
Transferability of licenses
- Licenses, previously non‑transferable, may be transferred/assigned with DIFS director consent and payment of applicable fees (e.g., on sale/assignment of business or licensed locations).
Penalties and technical edits
- The bill updates certain penalties and includes numerous technical/editorial changes throughout the Act (specific penalty revisions not exhaustively listed in committee summary).
Who is affected
- Primary: motor‑vehicle dealerships and other installment sellers, independent sales finance companies, and licensed financial institutions engaged in vehicle financing in Michigan.
- Regulatory agencies: DIFS (expanded administrative authority and new fund).
- Indirectly: consumers (changes affect licensing oversight, fee structure, and protections tied to licensing and enforcement).
Impact / Practical effects
- Increases administrative flexibility for DIFS (fee setting, NMLS use, control‑person vetting).
- Potentially higher licensing/bonding costs for some businesses (higher fee caps; elimination of reduced bond option).
- Creates administrative streamlining (longer multi‑year licenses, license transfer ability) and a dedicated fund to support enforcement and regulation.
- Strengthens background screening for individuals who control finance companies, which may raise compliance costs and timing for acquisitions or transfers.
For detailed statutory text and line‑by‑line changes, consult the substitute H‑1 language and the legislative analysis linked in the committee report.
