BILL ANALYSIS



H.B. 3008
By: Giddings
04-06-95
Committee Report (Unamended)


BACKGROUND

The Interim Special House Committee on Small business Access to
capital recommended several changes to the banking laws in Texas in
its interim report.  One recommendation was to "revise the... Code
and usury laws to permit reasonable loan fees for a smaller loan
base."

PURPOSE

This bill revises the Banking Code to allow banks to charge
reasonable fees for loan processing and other related costs.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly
grant any additional rulemaking authority to a state officer,
department, agency, or institution.

SECTION BY SECTION ANALYSIS

SECTION 1. Art. 342-508(a), Banking Code, is amended as follows:

     Art. 342-508.  LOAN FEES.  (a) establishes that a bank may
     require a borrower to pay reasonable fees and expenses in
     making, closing, disbursing, extending, readjusting, or
     renewing loans.  Fees may not exceed cost the bank reasonably
     expects to incur.  Payment of fees may be collected and
     retained by banks or paid to a third party or fees may be bade
     by borrowers directly to the third party.  Banks are not
     authorized to charge borrowers for payment of fees and
     expenses to banks' officers, directors, managers, or managing
     participants for services in connection with their duties as
     such.  If any conflict arises between this article and
     Subtitle 2 or Chapter 15, Title 79, Revised Statutes (Art.
     5069-2.01 et seq. V.T.C.S.), Title 79 prevails.
     
     (b) Banks may charge penalties for prepayments or late
     payments.  Limits to one the number of penalties for each past
     due payment.  Principal prepayments must be credited to the
     final note installment until the final installment is paid and
     then credited to installments in inverse order of maturity.
     
     (c) Fees and expenses charged are not considered part of the
     interest or compensation charged by banks for money.
     
     (All language concerning "PROHIBITED EXCEPTION." is struck.)
     
SECTION 2. Act applies only to loan transactions on or after the
effective date of the Act.

SECTION 3. Effective date.

SECTION 4. Emergency clause.





SUMMARY OF COMMITTEE ACTION

The committee considered HB 3008 in a public hearing on April 10, 1995.

The following person testified in favor of the bill:
Karen Neeley.

The motion to report HB 3008 favorably without amendments, with the recommendation that it do
pass and be printed and be sent to the Committee on Local and Consent Calendars, prevailed by the
following record vote:  8 Ayes, 0 Nays, 0 PNV, 1 Absent.