74R11634 E
          By Elkins                                             H.B. No. 2406
          Substitute the following for H.B. No. 2406:
          By Marchant                                       C.S.H.B. No. 2406
                                 A BILL TO BE ENTITLED
    1-1                                AN ACT
    1-2  relating to debt cancellation contracts offered by banks with
    1-3  certain installment loan transactions.
    1-4        BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
    1-5        SECTION 1.  Article 4.01, Title 79, Revised Statutes (Article
    1-6  5069-4.01, Vernon's Texas Civil Statutes), is amended by adding
    1-7  Section (10) to read as follows:
    1-8        (10)(a)  A bank and a borrower may agree to include in a
    1-9  consumer loan transaction a separate charge for a debt cancellation
   1-10  contract or waiver by which the bank agrees to waive, reduce, or
   1-11  cancel the remaining balance on a consumer loan in the event of the
   1-12  death or disability of the borrower.  A bank may not be the
   1-13  beneficiary of a credit life or disability insurance policy that
   1-14  provides coverage for any part of the balance of a loan that is
   1-15  subject to a debt cancellation contract.  A charge for a debt
   1-16  cancellation contract or waiver under this section may not be
   1-17  considered interest.
   1-18        (b)  A charge for a debt cancellation contract or waiver must
   1-19  comply with applicable regulations or guidelines established by the
   1-20  Office of the Comptroller of the Currency.
   1-21        (c)  The Finance Commission shall adopt debt cancellation
   1-22  rules and rates, consistent with applicable regulations or
   1-23  guidelines established by the Office of the Comptroller of the
    2-1  Currency, limited to the requiring of prominent disclosure to the
    2-2  borrower of the amount of the charge, a description of the
    2-3  coverage, the right of the borrower to cancel the agreement within
    2-4  21 days without penalty, information regarding possible federal
    2-5  income tax consequences, if any, in the event the debt is canceled,
    2-6  and other related contract or waiver terms.
    2-7        SECTION 2.  The importance of this legislation and the
    2-8  crowded condition of the calendars in both houses create an
    2-9  emergency and an imperative public necessity that the
   2-10  constitutional rule requiring bills to be read on three several
   2-11  days in each house be suspended, and this rule is hereby suspended,
   2-12  and that this Act take effect and be in force from and after its
   2-13  passage, and it is so enacted.