The Electronic Lien and Titling Program (“ELT Program”) administered by the Pennsylvania Department of Transportation (“PennDOT”) on a pilot basis pursuant to Pennsylvania Act 74 of 1995 is about to become a fully standardized program. As such, it will be available to all vehicle dealers, banking institutions and sales finance companies across Pennsylvania. A task force including PennDOT and industry representatives worked together to develop the pilot program. The full ELT Program becomes effective on July 10, 2008.

An amendment to the Pennsylvania Vehicle Code pursuant to Act 113 of 2006 replaces the pilot program with a comprehensive ELT Program for the vehicle finance industry throughout Pennsylvania. Under the statute, individuals and lienholders who are not normally engaged in the business or practice of financing vehicles are not required to participate in the ELT Program. Lienholders engaged in the business or practice of financing vehicles, however, must participate.

PennDOT is the agency charged with administering the ELT Program, which permits the recording of vehicle title information for new, transferred and corrected certificates of title through electronic media. The program is intended to provide a more efficient and cost-effective process relative to the more cumbersome submission and maintenance of paper documents. The ELT Program will permit the electronic communication of title information and notification to holders of security interests, particularly lenders listed as lienholders on certificates of title based on the lender’s financing of the vehicle purchase.

For the administration of the ELT Program, PennDOT is authorized to contract with private industry. PennDOT has designated at least three vendors from the private sector to provide computer interface between (i) new and used vehicle dealerships, banking institutions and sales finance companies and (ii) the PennDOT computer system for processing and issuing certificates of title and listing and notifying lienholders that their liens have been placed on certificates of title.

The ELT Program will affect the way business is conducted by vehicle dealerships licensed as installment sellers, banking institutions and non-depository lenders originating direct loans for vehicle purchases, as well as vehicle sales finance companies originating indirect loans. These lenders will be required to use the ELT Program to electronically register liens on vehicle titles and will no longer utilize paper filings for their liens. The ELT Program is just one of a number of ongoing developments in the regulatory environment affecting today’s vehicle finance industry.