BWM C.S.H.B. 594 75(R)BILL ANALYSIS FINANCIAL INSTITUTIONS C.S.H.B. 594 By: Thompson 4-2-97 Committee Report (Substituted) BACKGROUND Currently, there is no administrative fee for loans made under Articles 3.15, 4.01, and 5.02, Texas Credit Code. The last rate increase for Article 3.15 lenders was 1981. Many finance companies have either left Texas or have drastically scaled back their Texas operations. This bill proposes a fee of $25 when the loan is made, and $25 if the loan is financed. Such a fee at the time of refinancing cannot be charged or received by the lender more than once every 180 days. Also the fee for a returned check on loans covered by these sections is $15, while in most other areas of business it is $25. PURPOSE As proposed, HB 594 permits an administrative fee not to exceed $25 that is considered earned at the time the loan is made or refinanced, and if refinanced, may not be contracted for or received by the lender refinancing the loan more than once in any 180-day period. Also increases the fee for returned checks from $15 to $25. 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. Amends Section (8), Article 3.15, Title 79, Revised Statutes (Article 5059-3.15(8), Vernon's Texas Civil Statutes), to provide that the prohibition against charges for loans and other charges shall not apply to an administrative fee not to exceed $25, $10 if the loan is under $1,000, that is considered earned at the time the loan is made or refinanced, is not subject to refund, and, if the loan is refinanced, may not be contracted for or received by the lender refinancing the loan more than once in any 180-day period, and for which 50 cents of the fee charged is deposited with the comptroller for the purpose of fulfilling the responsibilities of the Finance Commission, as required under Article 342-1.011(f), V.T.C.S. SECTION 2. Amends Section (7), Article 4.01, Title 79, Revised Statutes (Article 5069-4.01(7), Vernon's Texas Civil Statutes), to to provide that the prohibition against charges for loans and other charges shall not apply to an administrative fee not to exceed $25, $10 if the loan is under $1,000, that is considered earned at the time the loan is made or refinanced, is not subject to refund, and, if the loan is refinanced, may not be contracted for or received by the lender refinancing the loan more than once in any 180-day period, and for which 50 cents of the fee charged is deposited with the comptroller for the purpose of fulfilling the responsibilities of the Finance Commission, as required under Article 342-1.011(f), V.T.C.S. SECTION 3. Amends Section (7), Article 5.02, Title 79, Revised Statutes (Article 5069-5.02(7), Vernon's Texas Civil Statues), to authorize a secondary mortgage loan lender to provide for an administrative fee not to exceed $25, $10 if the loan is under $1,000, that is considered earned at the time the loan is made or refinanced, is not subject to refund, and, if the loan is refinanced, may not be contracted for or received by the lender refinancing the loan more than once in any 180-day period, and for which 50 cents of the fee charged is deposited with the comptroller for the purpose of fulfilling the responsibilities of the Finance Commission, as required under Article 342-1.011(f), V.T.C.S. SECTION 4. Effective date: September 1, 1997. SECTION 5. Emergency Clause. COMPARISON OF ORIGINAL TO SUBSTITUTE The Committee Substitute changes the proposed $25 administrative fee to $10 for loans under $1,000, and also adds provisions for which 50 cents of the fee charged is deposited with the comptroller for the purpose of fulfilling the responsibilities of the Finance Commission, as required under Section 1.011(f), Texas Banking Act (Article 342-1.011, Vernon's Texas Civil Statutes).