AFSA Comments on New York DMV Regulation 78.25(b) - Vehicle Title Proof of Ownership Requirements

Sep 20, 2026

Uploaded by Violet

April 15, 2025 letter from the American Financial Services Association to the New York DMV addressing proposed enforcement changes to Regulation 78.25(b) requiring original vehicle titles to be retained by dealerships, including vehicles used as collateral for floorplan financing. AFSA argues the change would undermine floorplan lenders’ collateral protections, conflict with UCC-related expectations, increase fraud and creditor-loss risks, and destabilize the financing model relied on by dealers. AFSA requests alternatives that protect consumers without compromising financial stability, and notes administrative burden may worsen title-complaint issues.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages3

Reading Time8 min

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Letter to New York DMV Regarding Regulation 78.25(b)

Concerns About Dealer Title Retention Requirements

Risks to Floorplan Lenders and Fraud Protections

Requests for Alternative Solutions and Engagement

April 15, 2025 Ms. Rebecca Wood, Deputy Commissioner for Policy, Safety & Driver Licensing New York State Department of Motor Vehicles 6 Empire State Plaza Albany, NY 12228 Re: New York DMV Regulation 78.25(b)– Proof of Ownership Requirements Dear Ms. Wood, On behalf of the American Financial Services Association (AFSA), we are writing to express our concerns regarding the New York Department of Motor Vehicles’(DMV) anticipated changes to its enforcement of Regulation 78.25(b) to require that original vehicle titles be retained at dealerships, including titles to vehicles pledged as collateral for floorplan financing. While we understand the DMV’s intent, this new requirement introduces significant financial risks and operational obstacles for floorplan lenders and the broader automotive finance industry. Floorplan financing is a critical process that enables dealerships to maintain inventory by providing funding that is secured by the vehicles themselves. The original titles to financed vehicles serve as additional collateral for floorplan lenders. Requiring dealerships to retain these titles threatens floorplan lenders’ security interests, directly contradicting established contractual agreements and protections provided under the Uniform Commercial Code (UCC). The DMV’s new policy would significantly increase creditor losses in cases of dealer fraud, sales out of trust, and business closures, ultimately destabilizing an essential financing model that dealerships have come to rely on. Additionally, requiring dealerships to hold original titles introduces heightened risks of consumer and commercial fraud. Floorplan lenders’ common practice of holding the titles to floorplanned dealer inventory serves as a crucial safeguard against bad actors who might otherwise attempt to fraudulently procure multiple loans from separate lenders, with each loan being secured by the same vehicle. The practice of floorplan lenders holding titles for floorplanned inventory likewise helps to minimize the risk of unscrupulous dealers selling collateral out of trust without their floorplan lenders’ knowledge. Requiring dealerships to hold all original certificates of title, floorplanned or not, undermines these protections and increases exposure to financial loss not only to the original secured lender, but potentially to multiple additional creditors as well. Finally, changing the current practice would extend the time a bad actor could conceal his or her nefarious activities while continuing to defraud consumers, floorplan lenders, and other consumer and commercial lenders through pyramid type schemes. Our members have long-established processes that ensure bona fide purchasers can obtain titles upon completing a vehicle purchase by providing simple documentation already in their possession. These existing procedures effectively balance the needs of consumers, dealerships, and lenders without imposing undue risks on any party. Rather than enforcing a blanket requirement that disrupts these well-functioning industry practices, we encourage the DMV to consider alternative solutions that preserve financial security while addressing consumer concerns. Furthermore, for dealers who currently are allowed by their floorplan lenders to hold the tiles and Manufacturer’s Statements of Origin (MSOs), the DMV’s new policy would eliminate a critical tool available to them in default or near-default situations. In these situations, dealers may offer the titles and MSOs as collateral in order to retain their floorplan. Without this crucial flexibility during financial distress, these dealers would beat greater risk of immediate loss of their floorplan, which could lead to the closure of the dealership. Finally, it’s our understanding that a primary driver of the requirement that original titles be stored onsite at New York dealerships for inspection is the lack DMV staff bandwidth to address the current volume of consumer title complaints.

FAQs

What change to Regulation 78.25(b) concerns AFSA?

AFSA is concerned that the DMV plans to require dealerships to retain original vehicle titles, including titles for vehicles pledged as collateral for floorplan financing.

Why does AFSA believe the title-retention requirement harms floorplan lenders?

AFSA argues that original titles are additional collateral and safeguards for lenders, and that shifting title custody to dealerships would increase losses and contradict established protections and expectations.

What alternative does AFSA encourage the DMV to consider?

AFSA urges the DMV to reconsider the blanket requirement and engage stakeholders to develop an approach that preserves financial security while still addressing consumer concerns.

Sep 20, 2026

Uploaded by Violet