AN ACT TO AMEND SECTION 75-67-121, MISSISSIPPI CODE OF 1972, TO AUTHORIZE A LICENSEE UNDER THE SMALL LOAN REGULATORY LAW TO CHARGE A FEE FOR THE PURCHASE OF NONFILING OR NONRECORDING INSURANCE IN LIEU OF THE ACTUAL COST OF RECORDING AN INSTRUMENT EXECUTED AS SECURITY FOR A LOAN; AND FOR RELATED PURPOSES.
Summary
SB 2712 amends Mississippi’s Small Loan Regulatory Law to let licensed small-loan lenders charge borrowers a fee for purchasing nonfiling or nonrecording insurance instead of charging the actual cost of recording a security instrument. The fee is capped at no more than the amount the Secretary of State charges to file an initial financing statement or amendment under the UCC system. The bill keeps existing authority for lenders to pass through certain other costs, including title investigation fees, property insurance premiums, credit life/health/accident insurance, involuntary unemployment insurance, and optional noncredit insurance, subject to the law’s consumer-protection conditions.
The measure also preserves and restates rules governing optional auto club memberships and noncredit insurance sold in connection with small loans. Those products must be voluntary, cannot be required as a condition of credit, and must be offered by properly licensed and appointed employees. Borrowers must be allowed to pay for them with non-loan funds or from loan proceeds, and auto club memberships remain cancellable for a full refund within 30 days if unused. The Commissioner of Banking and Consumer Finance retains authority to adopt rules to prevent abuse and excessive charges. The act takes effect July 1, 2026.
Impact
The bill directly amends Section 75-67-121 of the Mississippi Code, changing the fee structure for secured small loans by authorizing a nonfiling/nonrecording insurance charge in place of the actual recording cost. It affects licensed lenders under the Small Loan Regulatory Law, borrowers on loans of $100 or more, and the Secretary of State’s UCC filing fee as the benchmark for the maximum allowable charge. It does not broadly rewrite lending law, but it does expand a lender’s permitted ancillary charges while keeping existing disclosure, licensing, and anti-coercion requirements in place.
Sentiment
The bill appears to have been broadly acceptable to both chambers, passing the Senate 47-2, the House 98-5, and then the Senate again 46-1 on concurrence with House amendments. Those margins suggest strong overall support and little sustained opposition. The available record does not include committee testimony, so the public rationale in the legislative history is limited, but the voting pattern indicates the measure was viewed as a relatively routine or technical adjustment to small-loan fee authority rather than a highly controversial policy change.
Contention
The main policy issue is whether lenders should be allowed to substitute a nonfiling/nonrecording insurance fee for the actual cost of recording collateral documents, which can affect borrower costs and lender revenue. Consumer-protection concerns are also implicit in the bill’s continued restrictions on optional products: auto club memberships and noncredit insurance cannot be required, must be clearly disclosed, and must be sold by properly licensed personnel. Any disagreement likely centered on whether the new fee authority could increase costs for borrowers or create another ancillary charge in the small-loan market, while supporters likely viewed it as a practical alternative to recording expenses and a clarification of permissible charges.