By: Marchant H.B. No. 1150 73R4535 LJD-F A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to excluding certain sums related to asset-backed 1-3 securities from the definition of interest. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Subtitle 1, Title 79, Revised Statutes (Article 1-6 5069-1.01 et seq., Vernon's Texas Civil Statutes), is amended by 1-7 adding Article 1.13 to read as follows: 1-8 Art. 1.13. CERTAIN SUMS EXCLUDED FROM DEFINITION OF INTEREST 1-9 WITH RESPECT TO ASSET-BACKED SECURITIES. (a) In this article: 1-10 (1) "Asset-backed securities" means debt obligations 1-11 or certificates of beneficial ownership that are: 1-12 (A) part of a single issue or single series of 1-13 securities aggregating $1,000,000 or more issuable in one or more 1-14 classes; 1-15 (B) secured by a pledge of or represent an 1-16 undivided ownership interest in a pool of assets, including loans, 1-17 leases, insurance premiums, and credit card or other types of 1-18 receivables; and 1-19 (C) issued by a pass-through entity for a 1-20 business, commercial, agricultural, investment, or similar purpose. 1-21 (2) "Pass-through entity" means a corporation, limited 1-22 liability company, association, general partnership, registered 1-23 limited liability partnership, limited partnership or business, 1-24 grantor or common-law trust under state law, or segregated pool of 2-1 assets under federal tax law that, on the date of original issuance 2-2 of asset-backed securities, does not have significant assets other 2-3 than: 2-4 (A) assets pledged to or held for the benefit of 2-5 holders of the asset-backed securities; or 2-6 (B) assets pledged to or held for the benefit of 2-7 holders of other asset-backed securities issued on an earlier date. 2-8 (b) Notwithstanding Article 1.01 of this subtitle, for 2-9 purposes of this title the term "interest" excludes any sums paid 2-10 or passed through, obligated to be paid or to be passed through, or 2-11 not paid as a result of a discounted sale price to the holders of 2-12 asset-backed securities by a pass-through entity, in connection 2-13 with the original issuance or otherwise, regardless of the 2-14 denomination of the sums under the terms of the asset-backed 2-15 securities. Sums excluded from the definition of interest by this 2-16 article are not subject to Article 1.04 of this subtitle. 2-17 (c) This article does not affect or otherwise apply to 2-18 conventional interest, as defined by Article 1.01 of this subtitle, 2-19 paid, charged, or received on the assets pledged to or held for the 2-20 benefit of the holders of asset-backed securities. 2-21 SECTION 2. The importance of this legislation and the 2-22 crowded condition of the calendars in both houses create an 2-23 emergency and an imperative public necessity that the 2-24 constitutional rule requiring bills to be read on three several 2-25 days in each house be suspended, and this rule is hereby suspended, 2-26 and that this Act take effect and be in force from and after its 2-27 passage, and it is so enacted.