By Giddings, Brimer H.B. No. 3008
74R4973 DWS-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to loan fees charged by a bank.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Article 8, Chapter 5, The Texas Banking Code
1-5 (Article 342-508, Vernon's Texas Civil Statutes), is amended to
1-6 read as follows:
1-7 Art. 342-508. LOAN FEES. (a) A bank may require a borrower
1-8 to pay all reasonable expenses and fees incurred in connection with
1-9 the making, closing, disbursing, extending, readjusting, or
1-10 renewing of a loan, regardless of whether those expenses or fees
1-11 are paid to third parties. A fee charged by the bank under this
1-12 section may not exceed the cost the bank reasonably expects to
1-13 incur in connection with the transaction to which the fee relates.
1-14 Payment for these expenses may be collected by the bank from the
1-15 borrower and retained by the bank or paid to a person rendering
1-16 services for which a charge has been made, or the payments may be
1-17 paid directly by the borrower to a third party to whom they are
1-18 payable. This section does not authorize the bank to charge its
1-19 borrower for payment of fees and expenses to an officer, director,
1-20 manager, or managing participant of the bank for services rendered
1-21 in the person's capacity as an officer, director, manager, or
1-22 managing participant. To the extent of any conflict between this
1-23 article and Subtitle 2 or Chapter 15, Title 79, Revised Statutes
1-24 (Article 5069-2.01 et seq., Vernon's Texas Civil Statutes), the
2-1 provision of Title 79, Revised Statutes, prevails.
2-2 (b) A bank may charge a penalty for prepayment or late
2-3 payment. Only one penalty may be charged by the bank on each past
2-4 due payment. Unless otherwise agreed in writing, prepayment of
2-5 principal must be applied on the final installment of the note or
2-6 other obligation until that installment is fully paid, and further
2-7 prepayments must be applied on installments in the inverse order of
2-8 their maturity.
2-9 (c) Notwithstanding any statute to the contrary, fees and
2-10 expenses charged and collected as provided by this section are not
2-11 considered a part of the interest or compensation charged by the
2-12 bank for the use, forbearance, or detention of money.
2-13 <PROHIBITED--EXCEPTION. No bank shall charge or collect any loan
2-14 fee or any other charge, by whatever name called, for the granting
2-15 of a consumer loan unless authorized by law. Provided, however, a
2-16 bank may require an applicant for a loan or discount to pay the
2-17 cost of any abstract, attorney's opinion or title insurance policy,
2-18 or other form of insurance, and filing or recording fees or
2-19 appraisal fees. Expenses necessary or proper for the protection of
2-20 the lender, and actually incurred in connection with the making of
2-21 the loan may be charged. In all consumer loan transactions in
2-22 which the amount loaned is $100 or more and the loan period is one
2-23 month or more, a bank may charge any borrower the reasonable value
2-24 of services rendered in connection with the making of any loan,
2-25 including the drawing of notes, the taking of acknowledgments and
2-26 affidavits, the preparation of financial statements, and the
2-27 investigation or analysis of the financial responsibility of the
3-1 borrower or any endorser, surety or co-signer, in an amount agreed
3-2 upon, but not to exceed $15 for each loan transaction. If the
3-3 amount that the bank charges for those services exceeds $15, the
3-4 amount of interest contracted for shall be forfeited. No bank shall
3-5 induce or permit any person, or husband and wife, to be obligated
3-6 directly or indirectly under more than one loan contract under this
3-7 article at the same time for the purpose, or with the effect, of
3-8 obtaining a higher authorized charge than would otherwise be
3-9 permitted. The charge authorized herein shall not apply to any
3-10 renewal or extension of an obligation on which the charge has been
3-11 previously imposed; provided, however, that such renewal or
3-12 extension may bear interest at the rate that is otherwise provided
3-13 by law. The charge shall not apply to a loan transaction wherein
3-14 the borrower applies all or a portion of the loan proceeds to
3-15 discharge a prior loan made by the same lender to the same borrower
3-16 and in connection with which the above charge was imposed. To the
3-17 extent of any conflict between this article and a provision of
3-18 Chapter 2, 3, 4, 5, 6, 6A, 7, 8, or 15, Title 79, Revised Statutes
3-19 (Article 5069-2.01 et seq., Vernon's Texas Civil Statutes), the
3-20 provision of Title 79, Revised Statutes, prevails.>
3-21 SECTION 2. This Act applies only to the making, closing,
3-22 disbursing, extending, readjusting, or renewing of a loan occurring
3-23 on or after the effective date of this Act. If one of those acts
3-24 occurs before the effective date of this Act, the act is covered by
3-25 the law in effect when the act occurred, and the former law is
3-26 continued in effect for that purpose.
3-27 SECTION 3. This Act takes effect September 1, 1995.
4-1 SECTION 4. The importance of this legislation and the
4-2 crowded condition of the calendars in both houses create an
4-3 emergency and an imperative public necessity that the
4-4 constitutional rule requiring bills to be read on three several
4-5 days in each house be suspended, and this rule is hereby suspended.