SRC-AAA C.S.H.B. 1971 75(R)BILL ANALYSIS
Senate Research CenterC.S.H.B. 1971
By: Marchant (Cain)
Economic Development
5-8-97
Committee Report (Substituted)
DIGEST
The Texas Credit Code, as it is commonly called, was originally passed by
the Texas Legislature in 1967. Since that time numerous amendments have
occurred, the most significant being the "omnibus interest rate" bill in
1981. Chapter 1 of Article 5069 (also Subtitle 1) defines "interest,"
fixes maximum rates of interest, and provides penalties for contracting
for, charging, or receiving interest at a rate in excess of the maximum
rate. Generally, Chapter 1 does not apply to consumer transactions, which
are governed by Subtitle II, consisting of Chapters 2 through 8, and
additionally, Chapter 15 of Subtitle III. H.B. 1971 modernizes language
and begins the rewrite of the entire Texas Credit Code in the code format.
The Legislative Council is undertaking a recodification of the financial
services statutes; the revision project parallels and incorporates the
council's effort.
PURPOSE
As proposed, C.S.H.B. 1971 modernizes language and begins to rewrite the
entire Texas Credit Code in the code format.
RULEMAKING AUTHORITY
Rulemaking authority is granted to the Finance Commission of Texas in
SECTIONS 1 and 2 (Articles 1B.002(c) and 3A.901, V.T.C.S.) of this bill.
SECTION BY SECTION ANALYSIS
SECTION 1. Amends Title 79(1), V.T.C.S., by adding Chapters 1B-1H, as
follows:
CHAPTER B. GENERAL PROVISIONS
Art. 1B.001. SHORT TITLE: Texas Credit Title.
Art. 1B.002. DEFINITIONS. Defines "contract interest," "credit card
transaction," "creditor," "interest," "judgment creditor," "judgment
debtor," "judgment interest," "legal interest," "lender credit card
agreement," "loan," "merchant discount," "money judgment," "obligor,"
"open-end account," "person," "prepayment penalty," "time price
differential," and "usury." Requires these definitions to be strictly
construed. Authorizes the Finance Commission of Texas (finance
commission) to adopt rules to accomplish the purposes of this subtitle.
CHAPTER 1C. INTEREST RATES
SUBCHAPTER A. USURY
Art. 1C.001. USURIOUS RATE OF INTEREST. Sets forth the requirements for
interest rates.
Art. 1C.002. ACCRUAL OF INTEREST WHEN NO RATE SPECIFIED. Sets forth the
requirements for accrual of interest when a creditor has not specified a
rate of interest.
SUBCHAPTER B. OTHER RATES AND PROVISIONS ON LOANS SECURED BY REAL
PROPERTY
Art. 1C.101. DETERMINING RATES OF INTEREST BY SPREADING. Sets forth
procedures for determining if a rate is usurious and sets forth duties for
a lender under this section.
Art. 1C.102. PROHIBITION ON PREPAYMENT CHARGE OR PENALTY. Prohibits a
lender from charging a prepayment charge or penalty.
Art. 1C.103. EFFECT OF FEDERAL PREEMPTION ON LATE CHARGES. Provides that
late charges are covered by the federal preemption of state interest rate
limitations.
CHAPTER 1D. OPTIONAL RATE CEILINGS
SUBCHAPTER A. RATE CEILINGS: APPLICABILITY, COMPUTATION, AND
PUBLICATION
Art. 1D.001. USE OF CEILINGS. Sets forth requirements for using rate
ceilings provided by this chapter.
Art. 1D.002. WEEKLY CEILING. Authorizes parties to an agreement described
in certain chapters to agree to an interest rate or on an amount of time
price differential producing a rate, that does not exceed the applicable
weekly ceiling.
Art. 1D.003. COMPUTATION OF WEEKLY CEILING. Sets forth calculations of
weekly ceilings. Defines "auction rate."
Art. 1D.004. MONTHLY CEILING. Sets forth requirements for using a monthly
ceiling.
Art. 1D.005. COMPUTATION OF MONTHLY CEILING. Sets forth calculation of
monthly ceiling.
Art. 1D.006. QUARTERLY CEILING. Sets forth requirements for using an
quarterly ceilings.
Art. 1D.007. ANNUALIZED CEILING. Sets forth requirements for using a
annualized ceilings.
Art. 1D.008. COMPUTATION OF QUARTERLY AND ANNUALIZED CEILINGS. Sets
forth calculations for quarterly and annualized ceilings.
Art. 1D.009. MAXIMUM AND MINIMUM WEEKLY, MONTHLY, QUARTERLY, OR ANNUALIZED
CEILING. Sets forth requirements for a maximum and minimum weekly,
monthly, quarterly, or annualized ceiling.
Art. 1D.010. COMPUTATION OF CEILING IF INFORMATION UNAVAILABLE. Sets
forth requirements of calculating a ceiling with missing information.
Art. 1D.011. PUBLICATION OF RATE CEILINGS. Sets forth requirements for
publicizing rate ceilings.
Art. 1D.012. JUDICIAL NOTICE. Authorizes a court to take judicial notice
of certain interpretations.
Art. 1D.013. DETERMINATION OF CEILING FOR CONTRACT TO RENEW OR EXTEND DEBT
PAYMENT. Provides that the rate ceiling for a contract to renew or extend
the terms of payment of a debt is the ceiling in effect under this chapter
when the contract for renewal or extension is made, regardless of when the
debt is incurred.
Art. 1D.014. RATE FOR LENDER CREDIT CARD AGREEMENT WITH MERCHANT DISCOUNT.
Sets forth the rate for a lender credit card agreement with a merchant
discount.
Art. 1D.015. VARIABLE RATE. Sets forth requirements for a variable rate.
Art. 1D.016. CHARGING OF RATE LOWER THAN AGREED RATE. Authorizes a
creditor to charge a rate that is lower than the rate agreed to in the
contract.
SUBCHAPTER B. OPEN-END ACCOUNTS
Art. 1D.101. OPEN-END ACCOUNT: CEILINGS. Sets forth ceiling requirements
for certain open-end accounts.
Art. 1D.102. VARIABLE RATE OPEN-END ACCOUNT: CEILINGS. Sets forth ceiling
requirements for certain open-end accounts which have a variable rate.
Art. 1D.103. OPEN-END ACCOUNT: CHANGE OF ANY AGREEMENT TERM. Sets forth
requirements for changing terms of an agreement for certain open-end
accounts.
Art. 1D.104. OPEN-END ACCOUNT: DISCLOSURE OF CERTAIN RATE VARIATIONS.
Sets forth disclosure requirements for certain rate variations.
Art. 1D.105. OPEN-END ACCOUNT: CEILING FOR PLAN OR ARRANGEMENT. Sets
forth the ceiling for particular plans or arrangements.
SUBCHAPTER C. OTHER PROVISIONS
Art. 1D.201. CONSUMER LOANS AND SECONDARY MORTGAGE LOANS. Sets forth the
applicability of Chapter 3A, Subtitle 2, or Chapter 15. Provides that
Subsection (c) does not apply to persons subject to Chapter 24, Insurance
Code.
SUBCHAPTER D. LIMITATIONS ON APPLICABILITY OF CHAPTER
Art. 1D.301. AGREEMENT TO WHICH CHAPTER DOES NOT APPLY. Sets forth
agreements to which this chapter does not apply.
Art. 1D.302. REQUIREMENTS INCONSISTENT WITH FEDERAL LAW. Sets forth
compliance with disclosure or notice requirements.
SUBCHAPTER E. ENFORCEMENT
Art. 1D.401. WHEN ACT OR OMISSION NOT VIOLATION. Sets forth acts or
omissions which do not violate this chapter.
Art. 1D.403. PENALTY FOR VIOLATION OF CHAPTER FOR CERTAIN CONTRACTS
SUBJECT TO SUBTITLE 2. Sets forth penalties for violations of this
chapter for taking certain actions upon contracts subject to Subtitle 2.
Art. 1D.403. PENALTY FOR VIOLATION OF CEILING IN CERTAIN CONTRACTS. Sets
forth penalties for violating ceiling requirements in certain contracts.
Art. 1D.404. ENFORCEMENT BY CONSUMER CREDIT COMMISSIONER. Requires the
consumer credit commissioner (commissioner) to enforce certain chapters.
Art. 1D.405. EXAMINATION OF RECORDS; INSPECTIONS; RULES. Provides that
Article 3A.902 applies to certain transactions.
Art. 1D.406. ENFORCEMENT BY CREDIT UNION COMMISSIONER. Requires the credit
union commissioner to enforce this chapter as it applies to certain
contracts.
Art. 1D.407. ENFORCEMENT BY DEPARTMENT OF INSURANCE. Requires the
Department of Insurance to enforce this chapter as it applies to certain
contracts.
SUBCHAPTER F. EFFECT ON OTHER STATUTES OF USING OPTIONAL RATE
Art. 1D.501. APPLICABILITY OF CREDIT UNION ACT. Sets forth the
applicability of the Credit Union Act.
Art. 1D.502. APPLICABILITY OF CHAPTER 24, INSURANCE CODE. Sets forth the
applicability of Chapter 24, Insurance Code.
CHAPTER 1E. JUDGMENT INTEREST
SUBCHAPTER A. GENERAL PROVISIONS
Art. 1E.001. INTEREST RATE REQUIRED IN JUDGMENT. Requires a money judgment
to specify the postjudgment interest rate.
Art. 1E.002. JUDGMENT INTEREST RATE: INTEREST RATE OR TIME PRICE
DIFFERENTIAL IN CONTRACT. Sets forth the interest rate for certain money
judgments.
Art. 1E.003. JUDGMENT INTEREST RATE: INTEREST RATE OR TIME PRICE
DIFFERENTIAL NOT IN CONTRACT. Sets forth the interest rate for certain
money judgments.
Art. 1E.004. PUBLICATION OF JUDGMENT INTEREST RATE. Sets forth publication
requirements for postjudgment interest rates.
Art. 1E.005. ACCRUAL OF JUDGMENT INTEREST. Sets forth requirements for
accrual of postjudgment interest.
Art. 1E.006. COMPOUNDING OF JUDGMENT INTEREST. Provides that postjudgment
interest on a judgment of a court compounds annually.
Art. 1E.007. JUDICIAL NOTICE OF JUDGMENT INTEREST RATE. Requires a court
to take judicial notice of a published postjudgment interest rate.
SUBCHAPTER B. PREJUDGMENT INTEREST IN WRONGFUL DEATH, PERSONAL
INJURY, OR PROPERTY DAMAGE CASE
Art. 1E.101. APPLICABILITY OF SUBCHAPTER. Provides that this subchapter
applies to certain cases.
Art. 1E.102. PREJUDGMENT INTEREST REQUIRED IN CERTAIN CASES. Provides that
a judgment in certain cases earns prejudgment interest.
Art. 1E.103. PREJUDGMENT INTEREST RATE FOR WRONGFUL DEATH, PERSONAL
INJURY, OR PROPERTY DAMAGE CASE. Provides that prejudgment interest rate
is equal to the postjudgment rate applicable at the time of judgment.
Art. 1E.104. ACCRUAL OF PREJUDGMENT INTEREST. Sets forth requirements for
accrual of postjudgment interest.
Art. 1E.105. EFFECT OF SETTLEMENT OFFER ON ACCRUAL OF PREJUDGMENT
INTEREST. Sets forth the effects of a settlement offer on prejudgment
interest.
Art 1E.106. SETTLEMENT OFFER REQUIREMENTS TO PREVENT PREJUDGMENT INTEREST
ACCRUAL. Requires a settlement offer to be in writing and delivered to
the claimant or its representatives, in order for interest to stop
accruing.
Art. 1E.107. VALUE OF SETTLEMENT OFFER FOR COMPUTING PREJUDGMENT
INTEREST. Sets forth the amount of a settlement, if the offer does not
provide for a cash payment.
Art. 1E.108. ACCRUAL OF PREJUDGMENT INTEREST DURING PERIODS OF TRIAL
DELAY. Sets forth accrual of interest requirements during periods of
trial delay.
SUBCHAPTER C. OTHER PREJUDGMENT INTEREST PROVISIONS
Art. 1E.201. PREJUDGMENT INTEREST RATE FOR CONDEMNATION CASE. Sets forth
the prejudgment interest rate for condemnation cases.
SUBCHAPTER D. EXCEPTIONS TO APPLICATION OF CHAPTER
Art. 1E.301. EXCEPTION FOR DELINQUENT TAXES. Provides that this chapter
does not apply judgments which earn interest set by Title 2, Tax Code.
Art. 1E.302. EXCEPTION FOR DELINQUENT CHILD SUPPORT. Provides that this
chapter does not apply to interest on unpaid child support under Section
157.265, Family Code.
CHAPTER 1F. PENALTIES AND REMEDIES
SUBCHAPTER A. CIVIL LIABILITY; CRIMINAL PENALTY
Art. 1F.001. LIABILITY FOR USURIOUS INTEREST. Sets forth civil penalties
for violating this subtitle.
Art. 1F.002. ADDITIONAL LIABILITY FOR MORE THAN TWICE AUTHORIZED RATE OF
INTEREST. Sets forth liability for charging more than twice the
authorized rate of interest.
Art. 1F.003. LIABILITY FOR USURIOUS LEGAL INTEREST. Sets forth penalties
for charging usurious legal interest.
Art. 1F.004. ADDITIONAL LIABILITY FOR MORE THAN TWICE AUTHORIZED RATE OF
LEGAL INTEREST. Sets forth added liability for charging more than twice
the authorized rate on legal interest.
Art. 1F.005. ATTORNEY'S FEES. Provides that a creditor liable for certain
violation is also liable to pay reasonable attorney's fees.
Art. 1F.006. LIMITATION ON FILING SUIT. Sets forth the statute of
limitations for a cause of action under this chapter.
Art. 1F.007. EXTENT OF LIABILITY. Provides that penalties are for certain
violations of this chapter and that no common law penalties apply.
Art. 1F.008. CRIMINAL PENALTY. Sets forth criminal penalties for violating
this chapter.
SUBCHAPTER B. EXCEPTION FROM LIABILITY
Art. 1F.101. ACCIDENTAL AND BONA FIDE ERROR. Provides that there is no
liability for charging any usurious interest by an accidental and a bona
fide error.
Art. 1F.102. LEGAL INTEREST DURING INTEREST-FREE PERIOD. Provides that
there is no liability for charging legal interest before the 30th day
after the date on which a debt is due.
Art. 1F.103. CORRECTION OF VIOLATION. Sets forth requirements for
correcting a violation without incurring liability.
Art. 1F.104. CORRECTION EXCEPTION AVAILABLE TO ALL SIMILARLY SITUATED.
Provides that if more than one creditor is liable under this subtitle,
compliance by one under Article 1F.103, is considered compliance by all.
Art. 1F.105. AMOUNTS PAYABLE PURSUANT TO A FINAL JUDGMENT. Provides that
a creditor is not liable for amounts payable pursuant to a final judgment.
CHAPTER 1G. MISCELLANEOUS PROVISIONS RELATING TO INTEREST
Art. 1G.001. IMPOSITION OF SURCHARGE FOR USE OF CREDIT CARD. Prohibits a
seller from imposing a surcharge for use of a credit card. Provides that
this article does not apply to certain governmental agencies.
Art. 1G.002. BILLING CYCLE INTEREST LIMITATION ON OPEN-END ACCOUNT WITHOUT
MERCHANT DISCOUNT. Provides that this article applies to open-end account
agreements which provide for certain credit card transactions.
Art. 1G.003. SALE OF OPEN-END ACCOUNT WITHOUT MERCHANT DISCOUNT. Sets
forth requirements for selling open-end accounts without a merchant
discount.
Art. 1G.004. APPLICATION OF LICENSING REQUIREMENT AND SUBTITLE 2 AND
CHAPTER 15 TO CREDIT UNION OR EMPLOYEE BENEFIT PLAN. Provides that a
credit union is not subject to Subtitle 2 or Chapter 15 and is not
required to obtain a license under this title. Provides that a certain
employee benefit plan is not subject to Subtitle 2.
CHAPTER 1H. COMMERCIAL TRANSACTIONS
SUBCHAPTER A. GENERAL PROVISIONS
Art. 1H.001. DEFINITIONS. Defines "account purchase transaction,"
"affiliate," "assetbacked securities," "business entity," "commercial
loan," "guaranty," "pass-through entity," "prepayment charge or penalty,"
and "qualified commercial loan."
Art. 1H.002. INTEREST. Sets forth requirements for interest on a
commercial loan.
Art. 1H.003. COMPUTATION OF TERM. Sets forth the calculation of a
commercial loan rate of interest.
Art. 1H.004. DETERMINATION OF RATES OF INTEREST BY SPREADING. Sets forth
requirements of determining an interest rate by amortizing or spreading.
Art. 1H.005. PREPAYMENT CHARGE. Authorizes a creditor and an obligor to
agree to a charge for prepayment. Provides that a prepayment charge is not
interest.
Art. 1H.006. CERTAIN AUTHORIZED CHARGE ON COMMERCIAL LOANS. Sets forth
permissible charges on commercial loans.
SUBCHAPTER B. SPECIAL PROVISIONS
Art. 1H.101. QUALIFIED COMMERCIAL LOAN. Sets forth requirements for a
qualified commercial loan.
Art. 1H.102. ASSET-BACKED SECURITIES TRANSACTION. Sets forth
requirements for an asset-backed securities transaction.
Art. 1H.103. ACCOUNT PURCHASE TRANSACTION. Sets forth requirements for an
account purchase transaction.
SECTION 2. Amends Section 2, Title 79, Article 5069, V.T.C.S., by adding
Chapter 3A, as follows:
CHAPTER 3A. CONSUMER LOANS
SUBCHAPTER A. GENERAL PROVISIONS; APPLICABILITY OF CHAPTER
Art. 3A.001. DEFINITIONS. Defines "irregular transaction," "regular
transaction," and "secondary mortgage loan."
Art. 3A.002. INTEREST COMPUTATION METHODS. Sets forth requirements for
interest computation methods.
Art. 3A.003. PURCHASE FROM MORTGAGEE. Provides that a purchase from a
mortgagee of an interest in a secondary mortgage loan that was made to
secure that loan is treated as if it were a secondary mortgage.
Art. 3A.004. CONSTITUTIONAL INTEREST; EXEMPTION. Provides that the
maximum interest rate is 10 percent, except as otherwise provided.
Provides a loan with a rate below 10 percent is not subject to this
chapter.
Art. 3A.005. APPLICABILITY OF CHAPTER. Sets forth the applicability of
this chapter.
SUBCHAPTER B. DESCRIPTION OF AND REQUIREMENTS FOR AUTHORIZED
ACTIVITIES
Art. 3A.101. AUTHORIZED ACTIVITIES; CEILING AMOUNT. Sets forth authorized
activities of certain entities. Prohibits a person from using any device,
subterfuge, or a pretense to evade the application of this article.
Art. 3A.102. ISSUANCE OF MORE THAN ONE LICENSE FOR A PERSON. Sets forth
the requirements of being issued more than one license.
Art. 3A.103. AREA OF BUSINESS; LOANS BY MAIL. Provides that a lender is
not limited to making loans to residents of the community in which the
office for which the license is granted. Authorizes a lender to make
certain transaction by mail.
SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE
Art. 3A.201. APPLICATION REQUIREMENTS. Sets forth application
requirements for a license under this chapter.
Art. 3A.202. BOND. Sets forth bond requirements under this chapter.
Art. 3A.203. INVESTIGATION OF APPLICATION. Requires the commissioner to
investigate whether to grant a license.
Art. 3A.204. APPROVAL OR DENIAL OF APPLICATION. Sets forth requirements
and procedures for approving or denying an application
Art. 3A.205. DISPOSITION OF FEES ON DENIAL OF APPLICATION. Requires the
commissioner to return the license fee and keep the investigation fee for
denied applications.
SUBCHAPTER D. LICENSE
Art. 3A.251. NAME AND PLACE ON LICENSE. Sets forth requirements for
placing a name and place on a license.
Art. 3A.252. LICENSE DISPLAY. Requires a license holder to display the
license.
Art. 3A.253. MINIMUM ASSETS FOR LICENSE. Sets forth the minimum assets
needed for a license holder.
Sec. 3A.254. ANNUAL LICENSE FEE. Sets forth the annual license fee.
Art. 3A.255. EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL FEE. Provides
for the expiration of a license for failure to pay an annual fee.
Art. 3A.256. LICENSE SUSPENSION OR REVOCATION. Sets forth requirements
for a license suspension or revocation.
Art. 3A.257. CORPORATE CHARTER FORFEITURE. Sets forth requirements for
forfeiture of a corporate charter.
Art. 3A.258. LICENSE SUSPENSION OR REVOCATION FILED WITH PUBLIC RECORDS.
Provides that license suspension or revocation is to be filed in the
public record of the commissioner.
Art. 3A.259. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE OF NEW LICENSE
AFTER REVOCATION. Sets forth requirements for reinstating a suspended
license and issuance of a new license after revocation.
Art. 3A.260. SURRENDER OF LICENSE. Authorizes a license holder to
surrender a license in certain ways.
Art. 3A.261. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR SURRENDER. Sets
forth the effects of a license suspension, revocation, or surrender.
Art. 3A.262. MOVING AN OFFICE. Sets forth requirements for a license
holder moving an office.
Art. 3A.263. TRANSFER OR ASSIGNMENT OF LICENSE. Authorizes a license to
be transferred or assigned with approval of the commissioner
SUBCHAPTER E. INTEREST CHARGES ON NON-REAL PROPERTY LOANS
Art. 3A.301. MAXIMUM INTEREST CHARGE. Sets forth requirements for
charging an interest on certain cash advances.
Art. 3A.302. MAXIMUM CHARGE FOR LOAN WITH SINGLE REPAYMENT. Sets forth
the maximum charge for a loan with a single payment.
Art. 3A.303. ADDITIONAL INTEREST FOR DEFAULT: REGULAR TRANSACTION. Sets
forth requirements for additional interest for default on a regular
transaction.
Art. 3A.304. ADDITIONAL INTEREST FOR INSTALLMENT DEFERMENT: REGULAR
TRANSACTION. Sets forth requirements for additional interest for
installment deferments on a regular transaction.
Art. 3A.305. COLLECTION OF DEFAULT OR DEFERMENT INTEREST. Authorizes
certain interest to be collected when it accrues or any time after it
accrues.
Art. 3A.306. ADDITIONAL INTEREST FOR DEFAULT: IRREGULAR TRANSACTION. Sets
forth requirements for additional interest for default on an irregular
transaction.
SUBCHAPTER F. ALTERNATE CHARGES FOR CERTAIN LOANS
Art. 3A.401. MAXIMUM CASH ADVANCE. Provides that the maximum cash advance
under this chapter is an amount computed under Article 2.08, using the
reference base amount of $100.
Art. 3A.402. ALTERNATE INTEREST CHARGE. Authorizes a loan contract to
provide for alternate interest charges.
Art. 3A.403. MAXIMUM INTEREST CHARGE FOR LOAN WITH SINGLE REPAYMENT. Sets
forth the maximum interest charge for a loan with a single payment.
Art. 3A.404. NO OTHER CHARGES AUTHORIZED. Prohibits a lender from
contracting for, charging, or receiving an amount on a loan unless the
charge is authorized. Provides that an insurance charge is not authorized.
Art. 3A.405. MAXIMUM LOAN PAYMENT. Sets forth the maximum loan term.
Art. 3A.406. REFUND. Sets forth requirements for a refund of charges.
Art. 3A.407. DEFAULT CHARGE; DEFERMENT OF PAYMENT. Provides that the
provisions of Subchapter E apply to a loan under this subchapter.
Art. 3A.408. SCHEDULES FOR WEEKLY, BIWEEKLY, OR SEMIMONTHLY INSTALLMENTS.
Authorizes the commissioner to prepare certain schedules.
SUBCHAPTER G. INTEREST AND OTHER CHARGES ON SECONDARY MORTGAGE
LOANS
Art. 3A.501. MAXIMUM INTEREST CHARGE. Sets forth the maximum interest
charged on secondary mortgage loans.
Art. 3A.502. ADDITIONAL INTEREST FOR DEFAULT: REGULAR TRANSACTION. Sets
forth requirements for additional interest for a default.
Art. 3A.503. ADDITIONAL INTEREST FOR INSTALLMENT DEFERMENT: REGULAR
TRANSACTIONS. Sets forth requirements for additional interest for an
installment deferment.
Art. 3A.504. COLLECTION OF DEFAULT OR DEFERMENT INTEREST. Authorizes
certain interest to be collected when it accrues or any time after it
accrues.
Art. 3A.505. ADDITIONAL INTEREST FOR DEFAULT: IRREGULAR TRANSACTION. Sets
forth requirements for additional interest for a default in an irregular
transaction.
Art. 3A.506. DATE OF FIRST SCHEDULED INSTALLMENT. Sets forth the date of
the first scheduled installment.
Art. 3A.507. AMOUNTS AUTHORIZED TO BE INCLUDED IN CONTRACT. Authorizes a
secondary mortgage contract to provide for certain fees and costs.
Art. 3A.508. AMOUNTS AUTHORIZED TO BE COLLECTED OR ADDED TO LOAN.
Authorizes certain amounts to be collected or added to a loan.
SUBCHAPTER H. REFUND OF PRECOMPUTED INTEREST
Art. 3A.601. REFUND OF PRECOMPUTED INTEREST: REGULAR TRANSACTION. Sets
forth requirements of refunding precomputed interest in a regular
transaction.
Art. 3A.602. REFUND OF PRECOMPUTED INTEREST ON CONTRACT: IRREGULAR
TRANSACTION OR TERM OF MORE THAN 60 MONTHS. Sets forth requirements of
refunding precomputed interest on a loan contract in an irregular
transaction.
Art. 3A.603. NO REFUND ON PARTIAL PREPAYMENT OR OF AMOUNT LESS THAN $1.
Provides that a refund is not required under this subchapter for a partial
payment or if the amount to be refunded is less than $1.
SUBCHAPTER I. INSURANCE
Art. 3A.701. REQUIRED PROPERTY INSURANCE. Sets forth requirements for
having insurance on certain property.
Art. 3A.702. CREDIT LIFE INSURANCE, CREDIT HEALTH AND ACCIDENT INSURANCE,
OR INVOLUNTARY UNEMPLOYMENT INSURANCE. Sets forth requirements for a
lender requesting a borrower to carry certain insurance.
Art. 3A.703. MAXIMUM AMOUNT OF INSURANCE COVERAGE. Sets forth the maximum
amount of insurance required.
Art 3A.704. INSURANCE NOTICE. Sets forth notice requirements for lenders.
Art 3A.705. INSURANCE MAY BE FURNISHED BY BORROWER. Authorizes a borrower
to furnish insurance from an existing insurance policy.
Art. 3A.706. BORROWER'S FAILURE TO PROVIDE REQUIRED INSURANCE. Sets forth
the effects of a borrower who fails to provide required insurance.
Art. 3A.707. REQUIREMENTS FOR INCLUDING INSURANCE CHARGE IN CONTRACT.
Requires insurance for which a charge is included in a loan contract to
meet certain requirements.
Art. 3A.708. FURNISHING OF INSURANCE DOCUMENT TO BORROWER. Sets forth
requirements for a lender in furnishing an insurance document to a
borrower.
Art. 3A.709. LENDER'S DUTY IF INSURANCE IS ADJUSTED OR TERMINATED. Sets
forth a lender's duty if insurance coverage is adjusted or terminated.
Art 3A.710. PAYMENT FOR INSURANCE FROM LOAN PROCEEDS. Provides that a
lender who accepts insurance under this subchapter as protection for a
loan may take certain actions.
Art. 3A.711. INSURANCE GAIN NOT INTEREST. Provides that a gain to a lender
from insurance is not considered interest.
Art. 3A.712. ACTION UNDER SUBCHAPTER NOT SALE OF INSURANCE. Provides that
collecting a charge from insurance is not a sale of insurance.
Art. 3A.713. REQUIRED AGENT OR BROKER PROHIBITED. Prohibits a lender from
requiring the purchase of insurance from an agent or broker.
Art. 3A.714. DECLINATION OF EQUAL INSURANCE COVERAGE PROHIBITED. Prohibits
a lender from declining existing insurance coverage providing
substantially equal benefits.
Art. 3A.715. EFFECT OF UNAUTHORIZED INSURANCE CHARGE. Sets forth the
effects of unauthorized insurance charges.
Art. 3A.716. NONFILING INSURANCE. Sets forth requirements for charging
fees for nonfiling insurance.
SUBCHAPTER J. AUTHORIZED LENDER'S DUTIES AND AUTHORITY
Art. 3A.801. DELIVERY OF INFORMATION TO BORROWER. Sets forth requirements
for delivery of certain information to the borrower.
Art. 3A.802. RECEIPT FOR CASH PAYMENT. Requires a lender to give a
receipt for a cash payment on a loan.
Art. 3A.803. ACCEPTANCE OF PREPAYMENT. Sets forth requirements by which
the lender will accept prepayments.
Art. 3A.804. RETURN OF INSTRUMENTS TO BORROWER ON REPAYMENT. Provides for
the return by the lender of certain instruments to the borrower upon
repayment.
Art. 3A.805. AGREEMENT FOR MORE THAN ONE LOAN OR CASH ADVANCE. Sets forth
requirements of an agreement between a lender and a borrower for more than
one loan or a cash advance.
Art. 3A.806. AGREEMENT TO MODIFY TERM OF SECONDARY MORTGAGE LOAN CONTRACT.
Sets forth requirements of an agreement to modify a term of a secondary
mortgage loan contract.
SUBCHAPTER K. PROHIBITIONS ON AUTHORIZED LENDER
Art. 3A.851. OBLIGATION UNDER MORE THAN ONE CONTRACT. Prohibits a lender
from inducing or permitting persons to become obligated under more than
one contract.
Art. 3A.852. AMOUNT AUTHORIZED. Sets forth amounts authorized to be
charged by a lender.
Art 3A.853. SECURITY FOR LOAN. Prohibits a lender from securing a loan
with certain items. Sets forth assignments of certain items a lender may
take as securityfor a loan.
Art. 3A.854. CONFESSION OF JUDGMENT; POWER OF ATTORNEY. Prohibits a
lender from taking a confession of judgment or a power of attorney for
certain purposes.
Art. 3A.855. DISCLOSURE OF AMOUNT FINANCED AND SCHEDULE OF PAYMENTS. Sets
forth requirements for disclosure of amounts financed and a schedule of
payments.
Art. 3A.856. INSTRUMENT WITH BLANK PROHIBITED. Prohibits a lender from
taking an instrument in which a blank is left unfilled.
Art. 3A.857. WAIVER OF BORROWER'S RIGHT PROHIBITED. Prohibits a waiver
from being taken in which a borrower waives rights.
Art. 3A.858. MAXIMUM LOAN TERM. Sets forth the maximum loan term for a
borrower.
SUBCHAPTER L. ADMINISTRATION OF CHAPTER
Art. 3A.901. ADOPTION OF RULES. Authorizes the finance commission to adopt
rules to enforce this chapter. Requires the commissioner to recommend
proposed rules. Sets forth requirements of the rules.
Art. 3A.902. EXAMINATION OF LENDERS; ACCESS TO RECORDS. Sets forth
requirements for the commissioner to examine a lender's records. Sets
forth the lender's duties under this article.
Art. 3A.903. GENERAL INVESTIGATION. Sets forth requirements of a general
investigation.
Art. 3A.904. CERTIFICATE; CERTIFIED DOCUMENT. Requires a commissioner to
put the commissioner's seal on certain payments.
Art. 3A.905. TRANSCRIPT OF HEARING: PUBLIC. Provides that a transcript
from a hearing under this chapter is a public record.
Art. 3A.906. APPOINTMENT OF AGENT. Requires an authorized lender to
maintain on file with the commissioner a written appointment of a resident
as the lender's agent in this state.
Art. 3A.907. PAYMENT OF EXAMINATION COSTS AND ADMINISTRATION EXPENSES.
Requires the lender to pay certain costs.
Art. 3A.908. AUTHORIZED LENDER'S RECORDS. Sets forth requirements for an
authorized lender's records.
Art. 3A.909. ANNUAL REPORT. Sets forth requirements for an annual report
by an authorized lender.
Art. 3A.910. CONDUCTING ASSOCIATED BUSINESS. Authorizes an authorized
lender to conduct certain business unless otherwise required by the
commissioner.
SECTION 3. Amends Article 2.02A(1), Title 79, Article 5069, V.T.C.S., to
make a conforming change.
SECTION 4. Amends Article 2.03(1), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 5. Amends Article 2.03A(1), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 6. Amends Article 2.07, Article 5069, V.T.C.S., to make a
conforming change.
SECTION 7. Amends Article 2.08(1), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 8. Amends Article 6.01(q), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 9. Amends Article 6.02(15), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 10. Amends Article 6.03(5), Article 5069, V.T.C.S., to make
conforming changes.
SECTION 11. Amends Articles 6.03(6)(a) and (e), Article 5069, V.T.C.S., to
make conforming changes.
SECTION 12. Amends Article 6.05, Article 5069, V.T.C.S., to make a
conforming change.
SECTION 13. Amends Article 6.12, Article 5069, V.T.C.S., to make a
conforming change.
SECTION 14. Amends Article 6.13, Article 5069, V.T.C.S., to make a
conforming change.
SECTION 15. Amends Article 6A.03(7), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 16. Amends Article 6A.16(b)(1), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 17. Amends Article 7.03(7), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 18. Amends Article 7.11(1), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 19. Amends Article 8.01(i), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 20. Amends Article 8.03, Article 5069, V.T.C.S., to make a
conforming change.
SECTION 21. Amends Article 15.01(i), Article 5069, V.T.C.S., to make a
conforming change.
SECTION 22. Amends Articles 15.02(d) and (e), Article 5069, V.T.C.S., to
make conforming changes.
SECTION 23. Amends Article 15.07, Article 5069, V.T.C.S., to make a
conforming change.
SECTION 24. Amends Section 24.03(g), Insurance Code, to make a conforming
change.
SECTION 25. Amends Section 24.11(h), Insurance Code, to make a conforming
change.
SECTION 26. Amends Section 24.15, Insurance Code, to make a conforming
change.
SECTION 27. Amends Section 24.16, Insurance Code, to make a conforming
change.
SECTION 28. Amends Section 24.17(a), Insurance Code, to make a conforming
change.
SECTION 29. Amends Section 24.20, Insurance Code, to make a conforming
change.
SECTION 30. Amends Article 21.79E, Insurance Code, to provide that any
insurer authorized to write any form of casualty insurance in this state
shall also be authorized to write policy forms and endorsements which
define involuntary unemployment to provide coverage and a premium charge
for interruption or reduction of a debtor's income during certain periods
of leave.
SECTION 31. Amends Section 26.02(a)(2), Business & Commerce Code, to make
a conforming change.
SECTION 32. Amends Section 242.098(b), Health and Safety Code, to make a
conforming change.
SECTION 33. Amends Section 143.1215(c), Local Government Code, to make a
conforming change.
SECTION 34. Amends Section 395.025(d), Local Government Code, to make a
conforming change.
SECTION 35. Amends Section 32.35(a)(5), Penal Code, to make a conforming
change.
SECTION 36. Amends Section 32.065(d), Tax Code, to make conforming changes.
SECTION 37. Amends Section 35-1, Article 581, V.T.C.S. (The Securities
Act), to make conforming changes.
SECTION 38. Amends Section 35-2, Article 581, V.T.C.S., to make a
conforming change.
SECTION 39. Amends Article 2.09A, Article 1302, V.T.C.S. (Texas
Miscellaneous Corporation Laws Act), to make a conforming change.
SECTION 40. Amends Section 7.01, Article 2461, V.T.C.S. (Texas Credit
Union Act), to make conforming changes.
SECTION 41. Amends Section 16.01, Article 4590i, V.T.C.S. (Medical
Liability and Insurance Improvement Act of Texas), to make a conforming
change.
SECTION 42. Amends Section 16.02(c), Article 4590i, V.T.C.S., to make a
conforming change.
SECTION 43. Amends Section 1.04(c), Article 6132b, V.T.C.S. (Texas Revised
Partnership Act), to make a conforming change.
SECTION 44. Amends Section 1(a), Chapter 617, Article 9022, V.T.C.S., to
make a conforming change.
SECTION 45. Repealers: Chapters 1, 1A, 3, 4, and 5, Title 79, V.T.C.S.
(Interest and consumer credit).
SECTION 46. Makes application of this Act prospective.
SECTION 47. Provides that this Act prevails over other conflicting law.
SECTION 48. Effective date: September 1, 1997.
SECTION 49. Emergency clause.
SUMMARY OF COMMITTEE CHANGES
SECTION 1.
Amends Article 1H.002, to set forth requirements for interest on a
commercial loan.
SECTION 30.
Amends Article 21.79E, Insurance Code, to provide that any insurer
authorized to write any form of casualty insurance in this state shall
also be authorized to write policy forms and endorsements which define
involuntary unemployment to provide coverage and premium charge for
interruption or reduction of a debtor's income during certain periods.
SECTION 45.
Deletes proposed SECTION 45 and renumbers subsequent sections.