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.