In response to the significant ambiguities raised by New Hampshire's recent amendments to its Motor Vehicle Retail Installment Sales Act — not to mention their immediate effectiveness and draconian liability provisions — the state's Banking Department has issued several nuggets of guidance.
Recently, the Department sought to address the pressing question of whether persons involved in various financing transactions and securitizations involving motor vehicle retail installment contracts must now obtain a license. As of August 26, 2024, the Department's web site states that securitization trusts that are established for the purpose of pooling retail installment contracts and reconstituting them into securities are not required to obtain a sales finance company license in the state. While the Department stated further that the licensing requirement will typically be fulfilled by the servicer or other entity responsible for servicing the contracts in the securitization trust, it did not expressly address the licensing obligations applicable in other types of financing transactions or to other types of special purpose entities. We expect that a similar licensing exemption would apply to those transactions and entities, because the servicer would need to be licensed or an exempt entity.
As we explained previously, the Department also advised that securitization trusts are not subject to the Act's requirement to provide notices to motor vehicle buyers of the assignment of their contracts.
The Department also explained that since the recent amendments removed motor vehicle leases from the Department's authority, sales finance companies engaged only in taking assignments of closed-end motor vehicle leases may surrender their licenses, although the leases remain subject to the state's Motor Vehicle Leasing statute.
Among other information, the Department described a "no-action" process through which the public may seek further specific guidance. In seeking a response to a no-action request, financial institutions will need to identify themselves and provide detailed and particular facts and circumstances, along with the legal basis for their interpretation. Financial institutions may seek confidential treatment of those requests, which the Department may grant in accordance with the state's Right-to-Know Law and other provisions.
The Department emphasized, though, that any no-action letter or response to a request for such a letter that the Department issues will not constitute legal advice, and its answers to frequently asked questions are intended only as informal guidance.
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