PHILADELPHIA — VINtek revealed this week that it has helped with the drafting of legislation that will allow the Texas Department of Motor Vehicles to develop rules to hold auto liens electronically, instead of via paper titles.

Texas House Bill 2575 was signed by Governor Rick Perry on June 17, 2011 and authorizes the Texas Department of Motor Vehicles to develop rules that will result in the holding of automotive liens electronically, instead of via paper titles, by most lien holders.

VINtek said the new legislation is designed to eliminate the cost and exposure to fraud associated with paper vehicle titles with liens in the state of Texas.

The legislation goes into effect Sept. 1, at which time the department may, by rule, begin to require participation for certain categories of lien holders, according to officials.

The legislation provides a phased approach for compliance by depository institutions based upon the quantity of liens recorded in a calendar year. Participation for institutions recording less than 100 security interests in a motor vehicle a year is voluntary, management noted.

ELT replaces paper titles with an electronic exchange of data between the Texas DMV and VINtek, acting as an intermediary on behalf of a lien holder.

ELT is also designed to eliminate exposure to a growing area of fraud that involves falsified lien release letters. Perpetrators create fictitious lien release documents and receive clear titles from the DMV. In an ELT program only the lien holder of a record can electronically release its lien — the DMV will reject any attempted release of lien via a letter, officials indicated.

"We are thrilled to see Texas join the ranks of Arizona, Pennsylvania, California and Louisiana in moving lien holders to electronic liens with the passing of HB 2575," said Larry Highbloom, president of VINtek. "Implementing an ELT program will assist Texas in reducing pressure on an extremely tight agency budget."

Texas handles the second highest vehicle title volume in the country, and the state implemented a voluntary ELT program in 2009 to help reduce DMV costs. The program became popular, and in 2010 VINtek helped 50 financial institutions in Texas move to electronic titles.

The company currently manages ELT for more than 200 financial institutions in the state and nearly 2,000 lenders nationwide.