By Marchant H.B. No. 1971
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to usury and the regulation of lenders.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 SECTION 1. Subtitle 1, Title 79, Revised Statutes, is
1-5 amended by adding Chapters 1B-1H to read as follows:
1-6 CHAPTER 1B. GENERAL PROVISIONS
1-7 Art. 1B.001. SHORT TITLE. This title may be cited as the
1-8 Texas Credit Title.
1-9 Art. 1B.002. DEFINITIONS. (a) In this subtitle:
1-10 (1) "Contract interest" means interest that an obligor
1-11 has paid or agreed to pay to a creditor under a written contract of
1-12 the parties. The term "contract interest" does not include
1-13 judgment interest.
1-14 (2) "Credit card transaction" means a transaction for
1-15 personal, family, or household use in which a credit card, plate,
1-16 coupon book, or credit card cash advance check may be used or is
1-17 used to debit an open-end account in connection with:
1-18 (A) a purchase or lease of goods or services; or
1-19 (B) a loan of money.
1-20 (3) "Creditor" means a person who loans money or
1-21 otherwise extends credit. The term "creditor" does not include a
1-22 judgment creditor.
1-23 (4) "Interest" means compensation for the use,
1-24 forbearance, or detention of money. The term "interest" does not
2-1 include time price differential, regardless of how it is
2-2 denominated.
2-3 (5) "Judgment creditor" means a person to whom a money
2-4 judgment is payable.
2-5 (6) "Judgment debtor" means a person obligated to pay
2-6 a money judgment.
2-7 (7) "Judgment interest" means interest on a money
2-8 judgment, whether the interest accrues before, on, or after the
2-9 date the judgment is rendered.
2-10 (8) "Legal interest" means interest charged or
2-11 received in the absence of any agreement by an obligor to pay
2-12 contract interest. The term "legal interest" does not include
2-13 judgment interest.
2-14 (9) "Lender credit card agreement":
2-15 (A) means an agreement between a creditor and an
2-16 obligor that provides:
2-17 (i) the obligor, by means of a credit card
2-18 transaction for personal, family, or household use, may:
2-19 (a) obtain loans from the
2-20 creditor directly or through other participating persons; and
2-21 (b) lease or purchase goods
2-22 or services from more than one participating lessor or seller who
2-23 honors the creditor's credit card;
2-24 (ii) the creditor or another person acting
2-25 in cooperation with the creditor is to reimburse the participating
2-26 persons, lessors, or sellers for the loans or the goods or
2-27 services purchased or leased;
3-1 (iii) the obligor is to pay the creditor
3-2 the amount of the loan or cost of the lease or purchase;
3-3 (iv) the unpaid balance of the loan,
3-4 lease, or purchase and interest on that unpaid balance are debited
3-5 to the obligor's account under the agreement;
3-6 (v) interest may be computed on the
3-7 balances of the obligor's account but is not precomputed; and
3-8 (vi) the obligor and the creditor may
3-9 agree that payment of part of the balance may be deferred;
3-10 (B) includes an agreement under Article 3A.805,
3-11 15.01(k), or 15.01(l) for an open-end account under which credit
3-12 card transactions may be made or a merchant discount may be taken;
3-13 and
3-14 (C) does not include:
3-15 (i) an agreement, including an open-end
3-16 account credit agreement, between a seller and a buyer or between a
3-17 lessor and a lessee; or
3-18 (ii) an agreement under which:
3-19 (a) the entire balance is
3-20 due in full each month; and
3-21 (b) no interest is charged
3-22 if the obligor pays the entire balance each month.
3-23 (10) "Loan" means an advance of money that is made to
3-24 or on behalf of an obligor, the principal amount of which the
3-25 obligor has an obligation to pay the creditor. The term "loan"
3-26 does not include a judgment.
3-27 (11) "Merchant discount" means the consideration,
4-1 including a fee, charge, discount, or compensating balance, that a
4-2 creditor requires, or that a creditor, subsidiary, or parent
4-3 company of the creditor, or subsidiary of the creditor's parent
4-4 company, receives directly or indirectly from a person other than
4-5 the obligor in connection with a credit card transaction under a
4-6 lender credit card agreement between the obligor and the creditor.
4-7 The term "merchant discount" does not include consideration
4-8 received by a creditor from the obligor in connection with the
4-9 credit card transaction.
4-10 (12) "Money judgment" means a judgment for money
4-11 entered by a court of competent jurisdiction. For purposes of this
4-12 subtitle, the term "money judgment" includes legal interest or
4-13 contract interest, if any, that is payable to a judgment creditor
4-14 under a judgment.
4-15 (13) "Obligor" means a person to whom money is loaned
4-16 or credit is otherwise extended. The term "obligor" does not
4-17 include:
4-18 (A) a judgment debtor; or
4-19 (B) a surety, guarantor, or similar person.
4-20 (14) "Open-end account":
4-21 (A) means an account under a written contract
4-22 between a creditor and an obligor that:
4-23 (i) the creditor reasonably contemplates
4-24 repeated transactions and the obligor is authorized to make
4-25 purchases or borrow money;
4-26 (ii) interest or time price differential
4-27 may be charged from time to time on an outstanding unpaid balance;
5-1 and
5-2 (iii) the amount of credit that may be
5-3 extended during the term of the account is generally made available
5-4 to the extent that any outstanding balance is repaid; and
5-5 (B) includes an account under an agreement
5-6 described by Article 3A.805 or Chapter 6 or 15.
5-7 (15) "Person" means an individual, partnership,
5-8 corporation, joint venture, trust, association, limited liability
5-9 company, or any legal entity however organized.
5-10 (16) "Prepayment penalty" means consideration agreed
5-11 on and contracted for a discharge and release of a loan before its
5-12 maturity or its regularly scheduled date or dates of payment, as a
5-13 result of an election by the obligor to pay all of the principal
5-14 amount before its stated maturity or its regularly scheduled date
5-15 or dates of payment.
5-16 (17) "Time price differential" means an amount,
5-17 however denominated or expressed, that is:
5-18 (A) added to the price at which a seller offers
5-19 to sell services or real or personal property to a purchaser for
5-20 cash payable at the time of sale; and
5-21 (B) paid or payable to the seller by the
5-22 purchaser for the privilege of paying the offered sales price after
5-23 the time of sale.
5-24 (18) "Usury" or "usurious interest" means interest
5-25 that exceeds the applicable maximum amount allowed by law.
5-26 (b) These definitions shall be strictly construed to
5-27 accomplish the purposes of this subtitle.
6-1 (c) The finance commission by rule may adopt other
6-2 definitions to accomplish the purposes of this subtitle.
6-3 CHAPTER 1C. INTEREST RATES
6-4 SUBCHAPTER A. USURY
6-5 Art. 1C.001. USURIOUS RATE OF INTEREST. (a) A creditor may
6-6 contract for, charge, and receive from an obligor interest or time
6-7 price differential.
6-8 (b) The maximum rate or amount of interest is 10 percent a
6-9 year except as otherwise provided by law. A greater rate of
6-10 interest than 10 percent a year unless otherwise provided by law is
6-11 usurious. All contracts for usury are contrary to public policy
6-12 and subject to the appropriate penalty prescribed by Chapter 1F.
6-13 (c) To determine the interest rate of a loan under this
6-14 subtitle, all interest at any time contracted for shall be
6-15 aggregated and amortized using the actuarial method during the
6-16 stated term of the loan.
6-17 Art. 1C.002. ACCRUAL OF INTEREST WHEN NO RATE SPECIFIED. If
6-18 a creditor has not agreed with an obligor to charge the obligor any
6-19 interest, the creditor may charge and receive from the obligor
6-20 legal interest at the rate of six percent a year on the principal
6-21 amount of the credit extended by the creditor to the obligor
6-22 beginning on the 30th day after the date on which the amount is
6-23 due. If an obligor has agreed to pay to a creditor any
6-24 compensation that constitutes interest, the obligor is considered
6-25 to have agreed on the rate produced by the amount of that interest,
6-26 regardless of whether that rate is stated in the agreement.
7-1 SUBCHAPTER B. OTHER RATES AND PROVISIONS
7-2 ON LOANS SECURED BY REAL PROPERTY
7-3 Art. 1C.101. DETERMINING RATES OF INTEREST BY SPREADING.
7-4 (a) To determine whether a loan secured in any part by an interest
7-5 in real property, including a lien, mortgage, or security interest,
7-6 is usurious, the interest rate is computed by amortizing or
7-7 spreading, using the actuarial method during the stated term of the
7-8 loan, all interest at any time contracted for, charged, or received
7-9 in connection with the loan.
7-10 (b) If a loan described in Subsection (a) is paid in full
7-11 before the end of the stated term of the loan and the amount of
7-12 interest received for the period that the loan exists exceeds the
7-13 amount that produces the maximum rate authorized by law for that
7-14 period, the lender shall:
7-15 (1) refund the amount of the excess to the borrower;
7-16 or
7-17 (2) credit the amount of the excess against amounts
7-18 owing under the loan.
7-19 (c) A lender who complies with Subsection (b) is not subject
7-20 to any of the penalties provided by law for contracting for,
7-21 charging, or receiving interest in excess of the maximum rate
7-22 authorized.
7-23 Art. 1C.102. PROHIBITION ON PREPAYMENT CHARGE OR PENALTY.
7-24 If a loan for property that is to be the residential homestead of
7-25 the borrower is made at an interest rate that is greater than a
7-26 rate of 12 percent a year, a prepayment charge or penalty may not
7-27 be collected on the loan unless the charge or penalty is required
8-1 by an agency created by federal law.
8-2 Art. 1C.103. EFFECT OF FEDERAL PREEMPTION ON LATE CHARGES.
8-3 On loans subject to 12 U.S.C. Sections 1735f-7 and 1735f-7a, as
8-4 amended, late charges, if assessed, are interest that is included
8-5 in computing the amount or rate of interest on the loan and,
8-6 therefore, covered by the federal preemption of state interest rate
8-7 limitations.
8-8 CHAPTER 1D. OPTIONAL RATE CEILINGS
8-9 SUBCHAPTER A. RATE CEILINGS: APPLICABILITY, COMPUTATION,
8-10 AND PUBLICATION
8-11 Art. 1D.001. USE OF CEILINGS. (a) Except as provided by
8-12 Subchapter B, a person may contract for, charge, or receive a rate
8-13 or amount that does not exceed the applicable interest rate ceiling
8-14 provided by this chapter. The use of a ceiling provided by this
8-15 chapter for any contract is optional, and a contract may provide
8-16 for a rate or amount allowed by other applicable law.
8-17 (b) A contract, including a contract for an open-end
8-18 account, that is subject to Chapter 3A, 6, 6A, or 7 may, as an
8-19 alternative to an interest rate or amount of time price
8-20 differential allowed under that chapter, provide for a simple or
8-21 precomputed rate or amount of time price differential that does not
8-22 exceed the applicable ceiling provided by this chapter or by the
8-23 equivalent yield authorized by Chapter 3A, 6, 6A, or 7.
8-24 (c) Except as inconsistent with this chapter, a party to a
8-25 contract that is subject to Chapter 3A, 6, 6A, or 7, or the party's
8-26 assignee, has all rights, duties, and obligations under the
8-27 applicable chapter, including those relating to refund credits on
9-1 prepayment or acceleration.
9-2 Art. 1D.002. WEEKLY CEILING. The parties to a written
9-3 agreement may agree to an interest rate, or in an agreement
9-4 described in Chapter 6, 6A, or 7, an amount of time price
9-5 differential producing a rate, that does not exceed the applicable
9-6 weekly ceiling.
9-7 Art. 1D.003. COMPUTATION OF WEEKLY CEILING. (a) The weekly
9-8 ceiling is computed by:
9-9 (1) multiplying the auction rate by two; and
9-10 (2) rounding the result obtained under Subdivision (1)
9-11 to the nearest one-quarter of one percent.
9-12 (b) The weekly rate ceiling becomes effective on Monday of
9-13 each week and remains in effect through the following Sunday.
9-14 (c) In this article, "auction rate" means the auction
9-15 average rate quoted on a bank discount basis for 26-week treasury
9-16 bills issued by the United States government, as published by the
9-17 Federal Reserve Board, for the week preceding the week in which the
9-18 weekly rate ceiling is to take effect.
9-19 Art. 1D.004. MONTHLY CEILING. (a) The monthly ceiling may
9-20 be used as an alternative to the weekly ceiling only for a contract
9-21 that:
9-22 (1) provides for a variable rate, including a contract
9-23 for an open-end account; and
9-24 (2) is not made for personal, family, or household
9-25 use.
9-26 (b) A contract that provides for the use of the monthly
9-27 ceiling may not provide for the use of another rate ceiling
10-1 provided under this subchapter.
10-2 Art. 1D.005. COMPUTATION OF MONTHLY CEILING. (a) The
10-3 consumer credit commissioner shall compute the monthly ceiling on
10-4 the first business day of the calendar month in which the rate
10-5 applies. The monthly ceiling is effective for one month beginning
10-6 on the first calendar day of each month. If the parties agree that
10-7 the rate is subject to being adjusted on a monthly basis, they may
10-8 further contract that the rate from time to time in effect may not
10-9 exceed the monthly ceiling from time to time in effect under this
10-10 article and the monthly ceiling from time to time in effect is the
10-11 ceiling on those contracts.
10-12 (b) The monthly ceiling is computed by averaging all of the
10-13 weekly ceilings computed using rates from auctions held during the
10-14 calendar month preceding the computation date of the monthly
10-15 ceiling.
10-16 Art. 1D.006. QUARTERLY CEILING. (a) A written contract,
10-17 including a contract that involves an open-end account, may, as an
10-18 alternative to the weekly ceiling, provide for an interest rate or
10-19 an amount of time price differential producing a rate that does not
10-20 exceed the applicable quarterly ceiling.
10-21 (b) A variable rate contract authorized under Article 1D.015
10-22 may not provide for use of both the weekly ceiling and the
10-23 quarterly ceiling.
10-24 Art. 1D.007. ANNUALIZED CEILING. The annualized ceiling may
10-25 be used as an alternative to the weekly ceiling only for a written
10-26 contract that involves an open-end account.
10-27 Art. 1D.008. COMPUTATION OF QUARTERLY AND ANNUALIZED
11-1 CEILING. (a) On December 1, March 1, June 1, and September 1 of
11-2 each year, the consumer credit commissioner shall compute the
11-3 quarterly ceiling and annualized ceiling for the calendar quarter
11-4 beginning the following January 1, April 1, July 1, and October 1,
11-5 respectively. The quarterly ceiling becomes effective for
11-6 three-month periods beginning on the four calendar dates set out in
11-7 this subsection and is subject to adjustment after each three-month
11-8 period. The annualized ceiling becomes effective on each of the
11-9 four calendar dates set out in this subsection and remains in
11-10 effect for a period of 12 months, at which time it is subject to
11-11 adjustment.
11-12 (b) The quarterly ceiling and annualized ceiling are
11-13 computed by averaging all of the weekly ceilings computed using
11-14 average auction rates during the three calendar months preceding
11-15 the computation date of the ceiling.
11-16 Art. 1D.009. MAXIMUM AND MINIMUM WEEKLY, MONTHLY, QUARTERLY,
11-17 OR ANNUALIZED CEILING. (a) If the rate computed for the weekly,
11-18 monthly, quarterly, or annualized ceiling is less than 18 percent a
11-19 year, the ceiling is 18 percent a year.
11-20 (b) Except as provided by Subsection (c) or (d), if the rate
11-21 computed for the weekly, monthly, quarterly, or annualized ceiling
11-22 is more than 24 percent a year, the ceiling is 24 percent a year.
11-23 (c) For a contract made, extended, or renewed under which
11-24 credit is extended for a business, commercial, investment, or
11-25 similar purpose and the amount of the credit extension is $250,000
11-26 or more, the 24-percent limitation on the ceilings in Subsection
11-27 (b) does not apply, and the limitation on the ceilings determined
12-1 by those computations is 28 percent a year.
12-2 (d) For an open-end account credit agreement that provides
12-3 for credit card transactions on which a merchant discount is not
12-4 imposed or received by the creditor, if the rate computed for the
12-5 weekly ceiling, monthly ceiling, quarterly ceiling, or annualized
12-6 ceiling is more than 21 percent a year, the ceiling is 21 percent a
12-7 year.
12-8 (e) In this chapter, "weekly ceiling," "monthly ceiling,"
12-9 "quarterly ceiling," or "annualized ceiling" refers to that ceiling
12-10 as determined after the application of this article.
12-11 Art. 1D.010. COMPUTATION OF CEILING IF INFORMATION
12-12 UNAVAILABLE. If any of the information required to compute a rate
12-13 ceiling is discontinued or is no longer available to the consumer
12-14 credit commissioner from the Federal Reserve Board in the time
12-15 required for the computation, the ceiling last computed remains in
12-16 effect until the information becomes available and a new ceiling is
12-17 computed from the obtained information.
12-18 Art. 1D.011. PUBLICATION OF RATE CEILINGS. (a) The
12-19 consumer credit commissioner shall send the rate ceilings computed
12-20 under this subchapter to the secretary of state for publication in
12-21 the Texas Register.
12-22 (b) The monthly, quarterly, or annualized ceiling shall be
12-23 published before the 11th day after the date on which the ceiling
12-24 is computed.
12-25 Art. 1D.012. JUDICIAL NOTICE. A court may take judicial
12-26 notice of interpretations issued by the consumer credit
12-27 commissioner or information published in the Texas Register under
13-1 Article 1D.011.
13-2 Art. 1D.013. DETERMINATION OF CEILING FOR CONTRACT TO RENEW
13-3 OR EXTEND DEBT PAYMENT. The rate ceiling for a contract to renew
13-4 or extend the terms of payment of a debt is the ceiling in effect
13-5 under this chapter when the contract for renewal or extension is
13-6 made, regardless of when the debt is incurred.
13-7 Art. 1D.014. RATE FOR LENDER CREDIT CARD AGREEMENT WITH
13-8 MERCHANT DISCOUNT. On an amount owed for a credit card transaction
13-9 under a lender credit card agreement that imposes or allows the
13-10 creditor to receive a merchant discount, the creditor may not
13-11 contract for, charge, or receive:
13-12 (1) a rate that exceeds the ceiling provided under
13-13 Article 15.02; or
13-14 (2) a fee or charge that:
13-15 (A) is not allowed under Chapter 15; or
13-16 (B) exceeds the amount allowed under Chapter 15.
13-17 Art. 1D.015. VARIABLE RATE. (a) The parties to a contract,
13-18 including a contract for an open-end account, may agree to any
13-19 index, formula, or provision of law by which the interest rate or
13-20 amount of time price differential will be determined, but the
13-21 agreed rate of interest or yield from an amount of time price
13-22 differential may not exceed the amount that would be produced by
13-23 the rate ceiling applicable to the contract.
13-24 (b) A variable contract rate described by this article may
13-25 not be used in a contract in which the interest or time price
13-26 differential is precomputed and added into the amount of the
13-27 contract at the time the contract is made.
14-1 (c) A variable rate agreement for credit extended primarily
14-2 for personal, family, or household use must have the disclosures
14-3 identified for variable rate contracts as specified by the
14-4 regulations issued by the Federal Reserve Board under the Truth in
14-5 Lending Act (15 U.S.C. Section 1601 et seq.), as amended, or if
14-6 that Act does not apply to a transaction for personal, family, or
14-7 household use due to the amount of the transaction, the following
14-8 disclosure must be given in a size equal to at least 10-point type
14-9 that is boldface, capitalized, underlined, or otherwise set out
14-10 from surrounding material so as to be conspicuous:
14-11 "NOTICE TO CONSUMER: UNDER TEXAS LAW, IF YOU CONSENT TO
14-12 THIS AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS
14-13 HIGH AS 24 PERCENT PER YEAR."
14-14 Art. 1D.016. CHARGING OF RATE LOWER THAN AGREED RATE. A
14-15 creditor may charge an interest rate or amount of time price
14-16 differential that is lower than the rate agreed to in the contract.
14-17 SUBCHAPTER B. OPEN-END ACCOUNTS
14-18 Art. 1D.101. OPEN-END ACCOUNT: CEILINGS. (a) To use the
14-19 quarterly or annualized ceiling for setting the interest rate on
14-20 current and future open-end account balances, the agreement must
14-21 provide for use of the ceiling, and the creditor must give notice
14-22 of the interest rate after the date on which the quarterly or
14-23 annualized ceiling is computed but before the last day of the next
14-24 succeeding calendar quarter.
14-25 (b) If the annualized ceiling is used, the rate is effective
14-26 for the 12-month period beginning on the date on which the rate
14-27 takes effect for the account.
15-1 (c) If the quarterly ceiling is used, the rate is effective
15-2 for the three-month period beginning on the date on which the rate
15-3 takes effect for the account.
15-4 (d) If a quarterly or annualized ceiling is being used for
15-5 an account and if the rate for the applicable period is less than
15-6 or equal to the ceiling to be in effect for the succeeding period
15-7 of equal length, the creditor may leave that rate in effect for the
15-8 succeeding period.
15-9 (e) A creditor who has disclosed to an obligor that an
15-10 election may be renewed under Subsection (d) is not required to
15-11 give additional notice of a renewal under that subsection.
15-12 (f) To increase a previously agreed rate, a creditor shall
15-13 comply with Article 1D.103 before the end of the last calendar
15-14 quarter of the period in which the rate previously agreed to is in
15-15 effect. The ceiling in effect for that period remains the ceiling
15-16 until the parties to the agreement agree to a new rate.
15-17 Art. 1D.102. VARIABLE RATE OPEN-END ACCOUNT: CEILINGS. The
15-18 applicable rate ceiling for an open-end account agreement that
15-19 provides for a variable rate or amount according to an index,
15-20 formula, or provision of law disclosed to the obligor, other than a
15-21 variable rate commercial contract that is subject to Article
15-22 1D.004, is the annualized, quarterly, or weekly ceiling as
15-23 disclosed to the obligor. The annualized ceiling shall be adjusted
15-24 after each 12-month period, the quarterly ceiling shall be adjusted
15-25 after each three-month period, and the weekly ceiling shall be
15-26 adjusted weekly.
15-27 Art. 1D.103. OPEN-END ACCOUNT: CHANGE OF ANY AGREEMENT TERM.
16-1 (a) An agreement covering an open-end account may provide that the
16-2 creditor may change the terms of the agreement for current and
16-3 future balances of that account by giving notice of the change to
16-4 the obligor.
16-5 (b) A notice under this article to change a provision of an
16-6 account, including the rate, or the index or formula used to
16-7 compute the rate, must include:
16-8 (1) the new provision, the new rate, or the index or
16-9 formula to be used to compute the rate;
16-10 (2) the date on which the change is to take effect;
16-11 (3) the period for which the change is to be effective
16-12 or after which the rate will be adjusted;
16-13 (4) a statement of whether the change is to affect
16-14 current and future balances; and
16-15 (5) the obligor's rights under this article and the
16-16 procedures for the obligor to exercise those rights.
16-17 (c) A creditor who increases a rate shall include with a
16-18 notice required by this article a form that may be returned at the
16-19 expense of the creditor and on which the obligor may indicate by
16-20 checking or marking an appropriate box or by a similar arrangement
16-21 the obligor's decision not to continue the account. The form may
16-22 be included on a part of the account statement that is to be
16-23 returned to the creditor or on a separate sheet. In addition to
16-24 the requirements of Subsection (b), the notice must include:
16-25 (1) the address to which the obligor may send notice
16-26 of the obligor's election not to continue the open-end account; and
16-27 (2) the following statement printed in not less than
17-1 10-point type or computer equivalent:
17-2 "YOU MAY TERMINATE THIS AGREEMENT IF YOU DO NOT WISH TO
17-3 PAY THE NEW RATE."
17-4 (d) An obligor is considered to have agreed to a change
17-5 under this article if the creditor mails a notice required by this
17-6 article to the obligor's most recent address shown in the
17-7 creditor's records and:
17-8 (1) the obligor chooses to retain the privilege of
17-9 using the open-end account;
17-10 (2) the obligor or a person authorized by the obligor
17-11 accepts or uses an extension of credit after the fifth day after
17-12 the date on which the notice is mailed; or
17-13 (3) the obligor does not notify the creditor in
17-14 writing before the 21st day after the date on which the notice is
17-15 mailed that the obligor does not wish to continue to use the
17-16 open-end account.
17-17 (e) An obligor who rejects a rate change in accordance with
17-18 this article is entitled to pay the balance on the open-end account
17-19 at the rate and over the period in effect immediately before the
17-20 date of the proposed change and under the same minimum payment
17-21 terms provided by the agreement. Rejection of a new rate does not
17-22 accelerate payment of the balance due.
17-23 (f) The procedure provided by this article for changing the
17-24 terms of an agreement is in addition to other means of amending the
17-25 agreement provided by law.
17-26 Art. 1D.104. OPEN-END ACCOUNT: DISCLOSURE OF CERTAIN RATE
17-27 VARIATIONS. (a) Except as provided by Subsection (b), a variation
18-1 in an interest rate on an account resulting from operation of the
18-2 previously disclosed index, formula, or provision of law is not
18-3 required to be disclosed under Article 1D.101 or 1D.103.
18-4 (b) Except as inconsistent with federal law, the creditor on
18-5 an open-end account agreement that provides for a variable interest
18-6 rate according to an index, formula, or provision of law, that is
18-7 primarily for personal, family, or household use, and that is
18-8 subject to this chapter shall give to the obligor notice of a
18-9 change in the rate resulting from operation of the index, formula,
18-10 or provision of law. The notice must be given:
18-11 (1) by a document mailed on or before the beginning of
18-12 the first cycle for which the change becomes effective; or
18-13 (2) on or with:
18-14 (A) the billing statement for a billing cycle
18-15 that precedes the cycle for which the change becomes effective, if
18-16 the account is covered by Article 15.02(d); or
18-17 (B) any billing statement, if the account is not
18-18 covered by Article 15.02(d).
18-19 Art. 1D.105. OPEN-END ACCOUNT: CEILING FOR PLAN OR
18-20 ARRANGEMENT. If a creditor implements a quarterly or annualized
18-21 ceiling for a majority of the creditor's open-end accounts that are
18-22 under a particular plan or arrangement and that are for obligors in
18-23 this state, that ceiling is also the ceiling for all open-end
18-24 accounts that are opened or activated under that plan for obligors
18-25 in this state during the period that the election is in effect.
18-26 SUBCHAPTER C. OTHER PROVISIONS
18-27 Art. 1D.201. CONSUMER LOANS AND SECONDARY MORTGAGE LOANS.
19-1 (a) A loan for which the rate is authorized under this chapter is
19-2 subject to Chapter 3A if the loan is:
19-3 (1) extended primarily for personal, family, or
19-4 household use and not extended for a business, commercial,
19-5 investment, agricultural, or other similar purpose;
19-6 (2) not secured by a lien on real estate; and
19-7 (3) made by a person engaged in the business of making
19-8 or negotiating those types of loans.
19-9 (b) A loan for which the rate is authorized is subject to
19-10 Chapter 3A if the loan is:
19-11 (1) extended primarily for personal, family, or
19-12 household use and not for a business, commercial, investment,
19-13 agricultural, or other similar purpose;
19-14 (2) predominantly payable in monthly installments;
19-15 (3) described by Article 3A.001(3), 3A.501, or 3A.806;
19-16 and
19-17 (4) made, negotiated, or arranged by a person engaged
19-18 in the business of making, negotiating, or arranging those types of
19-19 loans.
19-20 (c) A person other than a bank, savings bank, or savings and
19-21 loan association engaged in the business of making loans described
19-22 by Subsection (a) or (b) must obtain a license under Chapter 3A.
19-23 (d) Except as inconsistent with this chapter:
19-24 (1) a person engaged in the business of extending
19-25 open-end credit primarily for personal, family, or household use
19-26 and who charges on an open-end account a rate or amount under
19-27 authority of this chapter is subject to the applicable chapter in
20-1 Subtitle 2 or Chapter 15; and
20-2 (2) a party to an account described in Subdivision (1)
20-3 or the party's assignees has all the rights, duties, and
20-4 obligations under that applicable chapter.
20-5 (e) Subsection (c) does not apply to a person who is subject
20-6 to Chapter 24, Insurance Code.
20-7 SUBCHAPTER D. LIMITATIONS ON APPLICABILITY OF CHAPTER
20-8 Art. 1D.301. AGREEMENT TO WHICH CHAPTER DOES NOT APPLY. The
20-9 rate ceilings provided by this chapter do not apply to an
20-10 agreement:
20-11 (1) under which credit is extended by the seller, or
20-12 an owner, subsidiary, or corporate affiliate of the seller, for a
20-13 home solicitation transaction as defined by Chapter 13; and
20-14 (2) that is secured by a lien on the obligor's
20-15 homestead.
20-16 Art. 1D.302. REQUIREMENTS INCONSISTENT WITH FEDERAL LAW.
20-17 (a) A person is not required to comply with a disclosure or notice
20-18 requirement of this chapter that is inconsistent with federal law
20-19 or regulation.
20-20 (b) A creditor may modify a disclosure or notice requirement
20-21 of this chapter to conform to federal law.
20-22 SUBCHAPTER E. ENFORCEMENT
20-23 Art. 1D.401. WHEN ACT OR OMISSION NOT VIOLATION. An act or
20-24 omission does not violate this title if the act or omission
20-25 conforms to an interpretation of this title that is in effect at
20-26 the time of the act or omission and that was made by:
20-27 (1) the consumer credit commissioner under Article
21-1 2.02A(10); or
21-2 (2) an appellate court of this state or the United
21-3 States.
21-4 Art. 1D.402. PENALTY FOR VIOLATION OF CHAPTER FOR CERTAIN
21-5 CONTRACTS SUBJECT TO SUBTITLE 2. (a) A person who contracts for,
21-6 charges, or receives under a contract subject to Chapter 3A, 6, 6A,
21-7 7, or 15, including a contract for an open-end account, a rate or
21-8 amount of time price differential that exceeds the maximum
21-9 applicable rate or amount authorized by the applicable chapter or
21-10 this chapter is subject to a penalty for that violation determined
21-11 under Chapter 8.
21-12 (b) For a contract described in Subsection (a) that contains
21-13 a rate or amount authorized under this chapter, the failure to
21-14 perform a duty or comply with a prohibition provided by this
21-15 chapter is subject to Chapter 8 as if this chapter were in Subtitle
21-16 2.
21-17 Art. 1D.403. PENALTY FOR VIOLATION OF CEILING IN CERTAIN
21-18 CONTRACTS. A written contract, other than a contract to which
21-19 Article 1D.402 applies, that directly or indirectly provides for a
21-20 rate that exceeds the rate authorized by this chapter and that is
21-21 not otherwise authorized by law, is subject to the penalty
21-22 prescribed by Chapter 1F.
21-23 Art. 1D.404. ENFORCEMENT BY CONSUMER CREDIT COMMISSIONER.
21-24 Subject to Article 2.01, the consumer credit commissioner shall
21-25 enforce Chapters 2, 3A, 6, 6A, 7, 8, 15, and 51 as they apply to
21-26 contracts subject to those chapters.
21-27 Art. 1D.405. EXAMINATION OF RECORDS; INSPECTIONS; RULES.
22-1 (a) Article 3A.902 applies to a transaction:
22-2 (1) that is made by a person who holds a license under
22-3 Chapter 3A;
22-4 (2) that is subject to Chapter 15 or 3A; and
22-5 (3) the rate of which is authorized by this chapter.
22-6 (b) Subchapter L, Chapter 3A, applies to a loan:
22-7 (1) that is subject to Chapter 3A; and
22-8 (2) the rate of which is authorized by this chapter.
22-9 Art. 1D.406. ENFORCEMENT BY CREDIT UNION COMMISSIONER. The
22-10 credit union commissioner shall enforce this chapter as it applies
22-11 to contracts subject to the Texas Credit Union Act (Article
22-12 2461-1.01 et seq., Vernon's Texas Civil Statutes).
22-13 Art. 1D.407. ENFORCEMENT BY DEPARTMENT OF INSURANCE. The
22-14 Texas Department of Insurance shall enforce this chapter as it
22-15 applies to contracts subject to Chapter 24, Insurance Code.
22-16 SUBCHAPTER F. EFFECT ON OTHER STATUTES OF USING OPTIONAL RATE
22-17 Art. 1D.501. APPLICABILITY OF CREDIT UNION ACT. Except as
22-18 inconsistent with this chapter:
22-19 (1) a person subject to the Texas Credit Union Act
22-20 (Article 2461-1.01 et seq., Vernon's Texas Civil Statutes) who
22-21 contracts for, charges, or receives a rate or amount authorized by
22-22 this chapter remains subject to that Act; and
22-23 (2) a party to a transaction described by Subdivision
22-24 (1) has all the rights provided by that Act.
22-25 Art. 1D.502. APPLICABILITY OF CHAPTER 24, INSURANCE CODE.
22-26 (a) Except as inconsistent with this chapter:
22-27 (1) a person subject to Chapter 24, Insurance Code,
23-1 who contracts for, charges, or receives an interest rate authorized
23-2 by this chapter remains subject to that chapter; and
23-3 (2) a party to an insurance premium finance agreement,
23-4 including an agreement for an open-end account, has all the rights
23-5 provided by Chapter 24, Insurance Code.
23-6 (b) The licensing requirements of Chapter 3A do not apply to
23-7 a transaction described by Subsection (a)(1). The penalty
23-8 provisions of this title do not apply to a transaction described in
23-9 Subsection (a)(1).
23-10 CHAPTER 1E. JUDGMENT INTEREST
23-11 SUBCHAPTER A. GENERAL PROVISIONS
23-12 Art. 1E.001. INTEREST RATE REQUIRED IN JUDGMENT. A money
23-13 judgment of a court in this state must specify the postjudgment
23-14 interest rate applicable to that judgment.
23-15 Art. 1E.002. JUDGMENT INTEREST RATE: INTEREST RATE OR TIME
23-16 PRICE DIFFERENTIAL IN CONTRACT. A money judgment of a court of
23-17 this state on a contract that provides for interest or time price
23-18 differential earns postjudgment interest at a rate equal to the
23-19 lesser of:
23-20 (1) the rate specified in the contract, which may be a
23-21 variable rate; or
23-22 (2) 18 percent a year.
23-23 Art. 1E.003. JUDGMENT INTEREST RATE: INTEREST RATE OR TIME
23-24 PRICE DIFFERENTIAL NOT IN CONTRACT. (a) A money judgment of a
23-25 court of this state to which Article 1E.002 does not apply,
23-26 including court costs awarded in the judgment and prejudgment
23-27 interest, if any, earns postjudgment interest at the rate
24-1 determined under this article.
24-2 (b) On the 15th day of each month, the consumer credit
24-3 commissioner shall determine the postjudgment interest rate to be
24-4 applied to a money judgment rendered during the succeeding calendar
24-5 month.
24-6 (c) The postjudgment interest rate is:
24-7 (1) the auction rate quoted on a discount basis for
24-8 52-week treasury bills issued by the United States government as
24-9 most recently published by the Federal Reserve Board before the
24-10 date of computation;
24-11 (2) 10 percent a year if the auction rate described by
24-12 Subdivision (1) is less than 10 percent; or
24-13 (3) 20 percent a year if the auction rate described by
24-14 Subdivision (1) is more than 20 percent.
24-15 Art. 1E.004. PUBLICATION OF JUDGMENT INTEREST RATE. The
24-16 consumer credit commissioner shall send to the secretary of state
24-17 the postjudgment interest rate for publication, and the secretary
24-18 shall publish the rate in the Texas Register.
24-19 Art. 1E.005. ACCRUAL OF JUDGMENT INTEREST. (a) Except as
24-20 provided by Subsection (b), postjudgment interest on a money
24-21 judgment of a court in this state accrues during the period
24-22 beginning on the date the judgment is rendered and ending on the
24-23 date the judgment is satisfied.
24-24 (b) If a case is appealed and a motion for extension of time
24-25 to file a brief is granted for a party who was a claimant at trial,
24-26 interest does not accrue for the period of extension.
24-27 Art. 1E.006. COMPOUNDING OF JUDGMENT INTEREST. Postjudgment
25-1 interest on a judgment of a court in this state compounds annually.
25-2 Art. 1E.007. JUDICIAL NOTICE OF JUDGMENT INTEREST RATE. A
25-3 court of this state shall take judicial notice of a published
25-4 postjudgment interest rate.
25-5 SUBCHAPTER B. PREJUDGMENT INTEREST IN WRONGFUL DEATH,
25-6 PERSONAL INJURY, OR PROPERTY DAMAGE CASE
25-7 Art. 1E.101. APPLICABILITY OF SUBCHAPTER. This subchapter
25-8 applies only to a wrongful death, personal injury, or property
25-9 damage case of a court of this state.
25-10 Art. 1E.102. PREJUDGMENT INTEREST REQUIRED IN CERTAIN CASES.
25-11 A judgment in a wrongful death, personal injury, or property damage
25-12 case earns prejudgment interest.
25-13 Art. 1E.103. PREJUDGMENT INTEREST RATE FOR WRONGFUL DEATH,
25-14 PERSONAL INJURY, OR PROPERTY DAMAGE CASE. The prejudgment interest
25-15 rate is equal to the postjudgment interest rate applicable at the
25-16 time of judgment.
25-17 Art. 1E.104. ACCRUAL OF PREJUDGMENT INTEREST. Except as
25-18 provided by Article 1E.105 or 1E.108, prejudgment interest accrues
25-19 on the amount of a judgment during the period beginning on the
25-20 earlier of the 180th day after the date the defendant receives
25-21 written notice of a claim or the date the suit is filed and ending
25-22 on the day preceding the date judgment is rendered. Prejudgment
25-23 interest is computed as simple interest and does not compound.
25-24 Art. 1E.105. EFFECT OF SETTLEMENT OFFER ON ACCRUAL OF
25-25 PREJUDGMENT INTEREST. (a) If judgment for a claimant is equal to
25-26 or less than the amount of a settlement offer of the defendant,
25-27 prejudgment interest does not accrue on the amount of the judgment
26-1 during the period that the offer may be accepted.
26-2 (b) If judgment for a claimant is more than the amount of a
26-3 settlement offer of the defendant, prejudgment interest does not
26-4 accrue on the amount of the settlement offer during the period that
26-5 the offer may be accepted.
26-6 Art. 1E.106. SETTLEMENT OFFER REQUIREMENTS TO PREVENT
26-7 PREJUDGMENT INTEREST ACCRUAL. To prevent the accrual of
26-8 prejudgment interest under this subchapter, a settlement offer must
26-9 be in writing and delivered to the claimant or the claimant's
26-10 attorney or representative.
26-11 Art. 1E.107. VALUE OF SETTLEMENT OFFER FOR COMPUTING
26-12 PREJUDGMENT INTEREST. If a settlement offer does not provide for
26-13 cash payment at the time of settlement, the amount of the
26-14 settlement offer for the purpose of computing prejudgment interest
26-15 is the cost or fair market value of the settlement offer at the
26-16 time it is made.
26-17 Art. 1E.108. ACCRUAL OF PREJUDGMENT INTEREST DURING PERIODS
26-18 OF TRIAL DELAY. (a) In addition to the exceptions provided by
26-19 Article 1E.105, a court may order that prejudgment interest does
26-20 not accrue during periods of delay in the trial.
26-21 (b) A court shall consider:
26-22 (1) periods of delay caused by a defendant; and
26-23 (2) periods of delay caused by a claimant.
26-24 SUBCHAPTER C. OTHER PREJUDGMENT INTEREST PROVISIONS
26-25 Art. 1E.201. PREJUDGMENT INTEREST RATE FOR CONDEMNATION
26-26 CASE. The prejudgment interest rate in a condemnation case is
26-27 equal to the postjudgment interest rate at the time of judgment and
27-1 is computed as simple interest.
27-2 SUBCHAPTER D. EXCEPTIONS TO APPLICATION OF CHAPTER
27-3 Art. 1E.301. EXCEPTION FOR DELINQUENT TAXES. This chapter
27-4 does not apply to a judgment that earns interest at a rate set by
27-5 Title 2, Tax Code.
27-6 Art. 1E.302. EXCEPTION FOR DELINQUENT CHILD SUPPORT. This
27-7 chapter does not apply to interest that accrues on an amount of
27-8 unpaid child support under Section 157.265, Family Code.
27-9 CHAPTER 1F. PENALTIES AND REMEDIES
27-10 SUBCHAPTER A. CIVIL LIABILITY; CRIMINAL PENALTY
27-11 Art. 1F.001. LIABILITY FOR USURIOUS INTEREST. (a) A
27-12 creditor who contracts for, charges, or receives interest that is
27-13 greater than the amount authorized by this subtitle is liable to
27-14 the obligor for an amount that is equal to the greater of:
27-15 (1) three times the amount computed by subtracting the
27-16 amount of interest allowed by law from the total amount of interest
27-17 contracted for, charged, or received; or
27-18 (2) $2,000 or 20 percent of the amount of the
27-19 principal, whichever is less.
27-20 (b) This article applies only to a contract or transaction
27-21 subject to this subtitle.
27-22 (c) A creditor who charges or receives interest in excess of
27-23 the amount contracted for, but not in excess of the maximum amount
27-24 authorized by law, is not subject to penalties for usury but may be
27-25 liable for other remedies and relief as provided by law.
27-26 Art. 1F.002. ADDITIONAL LIABILITY FOR MORE THAN TWICE
27-27 AUTHORIZED RATE OF INTEREST. (a) In addition to the amount
28-1 determined under Article 1F.001, a creditor who charges and
28-2 receives interest that is greater than twice the amount authorized
28-3 by this subtitle is liable to the obligor for:
28-4 (1) the principal amount on which the interest is
28-5 charged and received; and
28-6 (2) the interest and all other amounts charged and
28-7 received.
28-8 (b) This article applies only to a contract or transaction
28-9 subject to this subtitle.
28-10 Art. 1F.003. LIABILITY FOR USURIOUS LEGAL INTEREST. (a) A
28-11 creditor who charges or receives legal interest that is greater
28-12 than the amount authorized by this subtitle is liable to the
28-13 obligor for an amount that is equal to the greater of:
28-14 (1) three times the amount computed by subtracting the
28-15 amount of legal interest allowed by law from the total amount of
28-16 interest charged or received; or
28-17 (2) $2,000 or 20 percent of the amount of the
28-18 principal, whichever is less.
28-19 (b) This article applies only to a transaction subject to
28-20 this subtitle.
28-21 Art. 1F.004. ADDITIONAL LIABILITY FOR MORE THAN TWICE
28-22 AUTHORIZED RATE OF LEGAL INTEREST. (a) In addition to the amount
28-23 determined under Article 1F.003, a creditor who charges and
28-24 receives legal interest that is greater than twice the amount
28-25 authorized by this subtitle is liable to the obligor for:
28-26 (1) the principal amount on which the interest is
28-27 charged and received; and
29-1 (2) the interest and all other amounts charged and
29-2 received.
29-3 (b) This article applies only to a transaction subject to
29-4 this subtitle.
29-5 Art. 1F.005. ATTORNEY'S FEES. A creditor who is liable
29-6 under Article 1F.001 or 1F.003 is also liable to the obligor for
29-7 reasonable attorney's fees set by the court.
29-8 Art. 1F.006. LIMITATION ON FILING SUIT. (a) An action
29-9 under this chapter must be brought within four years from the date
29-10 on which the usurious interest was contracted for, charged, or
29-11 received. The action must be brought in the county in which:
29-12 (1) the transaction was entered into;
29-13 (2) the usurious interest was charged or received;
29-14 (3) the creditor resides at the time of the cause of
29-15 action if the creditor is a natural person;
29-16 (4) the creditor maintains its principal office if the
29-17 creditor is not a natural person; or
29-18 (5) the obligor resides at the time of the accrual of
29-19 the cause of action.
29-20 (b) In the case of a transaction in which a creditor has
29-21 contracted for or charged usurious interest, at least 60 days
29-22 before filing suit seeking usury penalties the obligor shall give
29-23 written notice to the creditor advising the creditor in reasonable
29-24 detail of the nature and amount of the violation.
29-25 (c) A creditor who receives a notice under this article may
29-26 correct the violation as provided by Article 1F.103 during the
29-27 period beginning on the date the notice is received and ending on
30-1 the 60th day after that date. A creditor who corrects a violation
30-2 as provided by this article is not liable to an obligor for the
30-3 violation.
30-4 (d) The notice provision is not applicable to a defendant
30-5 filing a counterclaim action alleging usury in an original action
30-6 by the creditor.
30-7 Art. 1F.007. EXTENT OF LIABILITY. The penalties provided by
30-8 this chapter are the only penalties for violation of this subtitle
30-9 for contracting for, charging, or receiving interest in an amount
30-10 that produces a rate in excess of the maximum rate allowed by law
30-11 and no common law penalties apply.
30-12 Art. 1F.008. CRIMINAL PENALTY. (a) A person commits an
30-13 offense if the person contracts for, charges, or receives interest
30-14 on a transaction for personal, family, or household use that is
30-15 greater than twice the amount authorized by this subtitle.
30-16 (b) An offense under this article is a misdemeanor
30-17 punishable by a fine of not more than $1,000.
30-18 (c) Each contract or transaction that violates this article
30-19 is a separate offense.
30-20 (d) This article applies only to a contract or transaction
30-21 subject to this subtitle.
30-22 SUBCHAPTER B. EXCEPTION FROM LIABILITY
30-23 Art. 1F.101. ACCIDENTAL AND BONA FIDE ERROR. A creditor is
30-24 not subject to penalty under this chapter for any usurious interest
30-25 that results from an accidental and bona fide error.
30-26 Art. 1F.102. LEGAL INTEREST DURING INTEREST-FREE PERIOD. A
30-27 person is not liable to an obligor solely because the person
31-1 charges or receives legal interest before the 30th day after the
31-2 date on which the debt is due.
31-3 Art. 1F.103. CORRECTION OF VIOLATION. (a) A creditor is
31-4 not liable to an obligor for a violation of this subtitle if:
31-5 (1) not later than the 60th day after the date the
31-6 creditor actually discovered the violation, the creditor corrects
31-7 the violation as to that obligor by taking any necessary action and
31-8 making any necessary adjustment, including the payment of interest
31-9 on a refund, if any, at the applicable rate provided for in the
31-10 contract of the parties; and
31-11 (2) the creditor gives written notice to the obligor
31-12 of the violation before the obligor gives written notice of the
31-13 violation or files an action alleging the violation.
31-14 (b) For the purposes of Subsection (a), a violation is
31-15 actually discovered at the time of the discovery of the violation
31-16 in fact and not to the time when an ordinarily prudent person,
31-17 through reasonable diligence, could or should have discovered or
31-18 known of the violation. Actual discovery of a violation in one
31-19 transaction may constitute actual discovery of the same violation
31-20 in other transactions if the violation is of such a nature that it
31-21 would necessarily be repeated and would be clearly apparent in the
31-22 other transactions without the necessity of examining all the other
31-23 transactions.
31-24 (c) For purposes of Subsection (a), written notice is given
31-25 when the notice is delivered to the person or to the person's duly
31-26 authorized agent or attorney of record personally, by telecopier,
31-27 or by United States mail to the address shown on the most recent
32-1 documents in the transaction. Deposit of the notice as registered
32-2 or certified mail in a postage paid, properly addressed wrapper in
32-3 a post office or official depository under the care and custody of
32-4 the United States Postal Service is prima facie evidence of the
32-5 delivery of the notice to the person to whom the notice is
32-6 addressed.
32-7 Art. 1F.104. CORRECTION EXCEPTION AVAILABLE TO ALL SIMILARLY
32-8 SITUATED. If in a single transaction more than one creditor may be
32-9 liable for a violation of this subtitle, compliance with Article
32-10 1F.103 by any of those creditors entitles each to the same
32-11 protection provided by that article.
32-12 Art. 1F.105. AMOUNTS PAYABLE PURSUANT TO A FINAL JUDGMENT.
32-13 A creditor is not liable to an obligor for a violation of this
32-14 subtitle if the creditor receives interest that has been awarded
32-15 pursuant to a final judgment that is no longer subject to
32-16 modification or reversal.
32-17 CHAPTER 1G. MISCELLANEOUS PROVISIONS RELATING TO INTEREST
32-18 Art. 1G.001. IMPOSITION OF SURCHARGE FOR USE OF CREDIT CARD.
32-19 (a) In a sale of goods or services, a seller may not impose a
32-20 surcharge on a buyer who uses a credit card for an extension of
32-21 credit instead of cash, a check, or a similar means of payment.
32-22 (b) This article does not apply to a state agency, county,
32-23 local governmental entity, or other governmental entity that
32-24 accepts a credit card for the payment of fees, taxes, or other
32-25 charges.
32-26 Art. 1G.002. BILLING CYCLE INTEREST LIMITATION ON OPEN-END
32-27 ACCOUNT WITHOUT MERCHANT DISCOUNT. (a) This article applies to an
33-1 open-end account agreement that provides for credit card
33-2 transactions:
33-3 (1) in which the creditor relies on one of the
33-4 ceilings authorized by Chapter 1D for the rate of interest; and
33-5 (2) in connection with which the creditor does not
33-6 impose or receive a merchant discount.
33-7 (b) Interest or time price differential may not be charged
33-8 for a billing cycle of an open-end account credit agreement if:
33-9 (1) the total amount of the obligor's payments during
33-10 the cycle equal or exceed the balance owed under the agreement at
33-11 the end of the preceding billing cycle; or
33-12 (2) an amount is not owed under the agreement at the
33-13 end of the preceding billing cycle.
33-14 Art. 1G.003. SALE OF OPEN-END ACCOUNT WITHOUT MERCHANT
33-15 DISCOUNT. A seller or lessor may sell an open-end account credit
33-16 agreement described by Article 1G.002(a) or any balance under that
33-17 agreement to a purchaser who purchases a substantial part of the
33-18 seller's or lessor's open-end account credit agreements or balances
33-19 under those agreements in accordance with Article 6.07. A charge,
33-20 fee, or discount on that sale:
33-21 (1) is not a merchant discount;
33-22 (2) does not disqualify the open-end account credit
33-23 agreement or a balance under that agreement from being subject to
33-24 Chapter 3A or from coverage under this article; and
33-25 (3) does not subject the account to the limitations
33-26 provided by Article 15.02(d).
33-27 Art. 1G.004. APPLICATION OF LICENSING REQUIREMENT AND
34-1 SUBTITLE 2 AND CHAPTER 15 TO CREDIT UNION OR EMPLOYEE BENEFIT PLAN.
34-2 (a) A credit union is not subject to Subtitle 2 or Chapter 15 and
34-3 is not required to obtain a license under this title.
34-4 (b) With respect to a loan that an employee benefit plan
34-5 that is subject to Title I of the Employee Retirement Income
34-6 Security Act of 1974 (29 U.S.C. Sections 1001-1114) makes to a
34-7 participant in the plan or a participant's beneficiary, the plan is
34-8 not subject to Subtitle 2 and is not required to obtain a license
34-9 under this title.
34-10 CHAPTER 1H. COMMERCIAL TRANSACTIONS
34-11 SUBCHAPTER A. GENERAL PROVISIONS
34-12 Art. 1H.001. DEFINITIONS. In this chapter:
34-13 (1) "Account purchase transaction" means an agreement
34-14 under which a person engaged in a commercial enterprise sells
34-15 accounts, instruments, documents, or chattel paper subject to this
34-16 subtitle at a discount, regardless of whether the person has a
34-17 repurchase obligation related to the transaction.
34-18 (2) "Affiliate" of an obligor means a person who
34-19 directly or indirectly, through one or more intermediaries,
34-20 controls, is controlled by, or is under common control with the
34-21 obligor. In this subdivision "control" means the possession,
34-22 directly or indirectly, of the power to direct or cause the
34-23 direction of the management and policies of a person, whether
34-24 through the ownership of voting securities, by contract, or
34-25 otherwise.
34-26 (3) "Asset-backed securities" means debt obligations
34-27 or certificates of beneficial ownership that:
35-1 (A) are a part of a single issue or single
35-2 series of securities in an aggregate of $1,000,000 or more and
35-3 issuable in one or more classes;
35-4 (B) are secured by a pledge of, or represent an
35-5 undivided ownership interest in:
35-6 (i) one or more fixed or revolving
35-7 financial assets that by their terms convert into cash within a
35-8 definite period; and
35-9 (ii) rights or other assets designed to
35-10 assure the servicing or timely distribution of proceeds to security
35-11 holders; and
35-12 (C) are issued for a business, commercial,
35-13 agricultural, investment, or similar purpose by a pass-through
35-14 entity.
35-15 (4) "Business entity" means a partnership,
35-16 corporation, joint venture, limited liability company, or other
35-17 business organization or association, however organized.
35-18 (5) "Commercial loan" means a loan that is made
35-19 primarily for business, commercial, investment, agricultural, or
35-20 similar purposes. The term does not include a loan made primarily
35-21 for personal, family, or household use.
35-22 (6) "Guaranty" means an agreement under which a
35-23 person:
35-24 (A) assumes, guarantees, or otherwise becomes
35-25 primarily or contingently liable for the payment or performance of
35-26 an obligation of another person;
35-27 (B) provides security for the payment or
36-1 performance of an obligation of another person, whether through the
36-2 creation of a lien or security interest or otherwise; or
36-3 (C) agrees to purchase, or to advance
36-4 consideration to purchase, the obligation or any property
36-5 constituting security for the payment or performance of the
36-6 obligation.
36-7 (7) "Pass-through entity" means a business entity,
36-8 association, grantor or common-law trust under state law, or
36-9 segregated pool of assets under federal tax law that, on the date
36-10 of original issuance of asset-backed securities, does not have
36-11 significant assets other than:
36-12 (A) assets pledged to or held for the benefit of
36-13 holders of the asset-backed securities; or
36-14 (B) assets pledged to or held for the benefit of
36-15 holders of other asset-backed securities previously issued.
36-16 (8) "Prepayment charge or penalty" means compensation
36-17 that is or will become due and payable, or was paid, by an obligor
36-18 to a creditor solely as a result of, or as a condition to, the
36-19 payment or maturity of all or a portion of the principal amount of
36-20 a loan before its stated maturity or its regularly scheduled date
36-21 or dates of payment, as a result of any election by the obligor to
36-22 pay all or a portion of the principal amount before its stated
36-23 maturity or its regularly scheduled date or dates of payment.
36-24 (9) "Qualified commercial loan" means:
36-25 (A) a commercial loan in the original principal
36-26 amount of $3,000,000 or more; or
36-27 (B) a renewal or extension of a commercial loan
37-1 in the original principal amount of $3,000,000 or more, whether the
37-2 principal amount of the loan at the time of its renewal or
37-3 extension is $3,000,000 or more.
37-4 Art. 1H.002. INTEREST. (a) A creditor may contract for,
37-5 charge, and receive from an obligor interest on a commercial loan.
37-6 (b) The maximum rate or amount of interest authorized shall
37-7 be the applicable ceilings computed in accordance with Chapter 1D.
37-8 All other applicable provisions, remedies, and penalties of this
37-9 subtitle apply to a commercial loan unless expressly provided
37-10 otherwise by this chapter.
37-11 Art. 1H.003. COMPUTATION OF TERM. A creditor and an obligor
37-12 may agree to compute the term and rate of a commercial loan on the
37-13 basis of a 360-day year consisting of twelve 30-day months. For
37-14 purposes of this chapter, each rate ceiling expressed as a rate per
37-15 year may mean a rate per year consisting of 360 days and of twelve
37-16 30-day months.
37-17 Art. 1H.004. DETERMINING RATES OF INTEREST BY SPREADING.
37-18 (a) To determine whether a commercial loan is usurious, the
37-19 interest rate is computed by amortizing or spreading using the
37-20 actuarial method during the stated term of the loan all interest at
37-21 any time contracted for, charged, or received in connection with
37-22 the loan.
37-23 (b) If a commercial loan is paid in full before the end of
37-24 the stated term of the loan and the amount of interest received for
37-25 the period that the loan exists exceeds the amount that produces
37-26 the maximum rate authorized by law for that period, the lender
37-27 shall:
38-1 (1) refund the amount of the excess to the borrower;
38-2 or
38-3 (2) credit the amount of the excess against amounts
38-4 owing under the loan.
38-5 (c) A lender who complies with Subsection (b) is not subject
38-6 to any of the penalties provided by law for contracting for,
38-7 charging, or receiving interest in excess of the maximum rate
38-8 authorized.
38-9 Art. 1H.005. PREPAYMENT CHARGE. A creditor and an obligor
38-10 may agree to a charge for prepayment in a loan subject to this
38-11 chapter. A charge for prepayment is not interest.
38-12 Art. 1H.006. CERTAIN AUTHORIZED CHARGES ON COMMERCIAL LOANS.
38-13 In addition to the interest authorized by this chapter, the parties
38-14 to a commercial loan may agree and stipulate for:
38-15 (1) a delinquency charge on the amount of any
38-16 installment or other amount in default for a period of not less
38-17 than 10 days in a reasonable amount not to exceed five percent of
38-18 the total amount of the installment; and
38-19 (2) a returned check fee in an amount not to exceed
38-20 $25 on any check, draft, order, or other instrument or form of
38-21 remittance that is returned unpaid or dishonored for any reason.
38-22 SUBCHAPTER B. SPECIAL PROVISIONS
38-23 Art. 1H.101. QUALIFIED COMMERCIAL LOAN. (a) The parties
38-24 to a qualified commercial loan agreement may contract for a rate or
38-25 amount of interest that does not exceed the applicable rate
38-26 ceiling.
38-27 (b) The parties may contract for the following additional
39-1 charges:
39-2 (1) a discount or commission that an obligor has paid
39-3 or agreed to pay to one or more underwriters of securities issued
39-4 by the obligor;
39-5 (2) an option or right to exchange, redeem, or convert
39-6 all or a portion of the principal amount of the loan, or interest
39-7 on the principal amount, for or into capital stock or other equity
39-8 securities of an obligor or of an affiliate of the obligor;
39-9 (3) an option or right to purchase capital stock or
39-10 other equity securities of an obligor or of an affiliate of the
39-11 obligor;
39-12 (4) an option or other right, whether by contract,
39-13 conveyance, or otherwise, to participate in or own a share of the
39-14 income, revenues, production, or profits:
39-15 (A) of an obligor or of an affiliate of the
39-16 obligor;
39-17 (B) of any segment of the business or operations
39-18 of an obligor or of an affiliate of the obligor; or
39-19 (C) derived or to be derived from any ownership
39-20 rights of an obligor or of an affiliate of the obligor in real or
39-21 personal property, including any proceeds of the sale or other
39-22 disposition of ownership rights; or
39-23 (5) any compensation realized as a result of the
39-24 receipt, exercise, sale, or other disposition of any option or
39-25 other right described by this subsection.
39-26 (c) A charge under Subsection (b) is not interest.
39-27 Art. 1H.102. ASSET-BACKED SECURITIES TRANSACTION. An amount
40-1 that is paid, passed through, or obligated to be paid or to be
40-2 passed through in connection with asset-backed securities or that
40-3 is not paid as a result of a discounted sale price to the holders
40-4 of asset-backed securities by a pass-through entity is not
40-5 interest. This article does not affect interest that is agreed on
40-6 and fixed by the parties to a written contract and paid, charged,
40-7 or received on the ultimate underlying assets pledged to or held
40-8 for the benefit of holders of asset-backed securities.
40-9 Art. 1H.103. ACCOUNT PURCHASE TRANSACTION. (a) An amount
40-10 of a discount in, or charged under, an account purchase transaction
40-11 is not interest.
40-12 (b) For the purposes of this chapter, the parties'
40-13 characterization of an account purchase transaction as a purchase
40-14 is conclusive that the account purchase transaction is not a
40-15 transaction for the use, forbearance, or detention of money.
40-16 SECTION 2. Subtitle 2, Title 79, Revised Statutes (Article
40-17 5069-2.01 et seq., Vernon's Texas Civil Statutes), is amended by
40-18 adding Chapter 3A to read as follows:
40-19 CHAPTER 3A. CONSUMER LOANS
40-20 SUBCHAPTER A. GENERAL PROVISIONS; APPLICABILITY OF CHAPTER
40-21 Art. 3A.001. DEFINITIONS. In this chapter:
40-22 (1) "Irregular transaction" means a loan that is
40-23 payable:
40-24 (A) in installments that are not consecutive or
40-25 monthly;
40-26 (B) with installments that are not substantially
40-27 equal in amount; or
41-1 (C) with a first scheduled installment due that
41-2 is not within one month and 15 days after the date of the loan.
41-3 (2) "Regular transaction" means a loan that is
41-4 payable:
41-5 (A) in consecutive monthly installments;
41-6 (B) with installments substantially equal in
41-7 amount; and
41-8 (C) with a first scheduled installment due
41-9 within one month and 15 days after the date of the loan.
41-10 (3) "Secondary mortgage loan" means a loan that is:
41-11 (A) secured in whole or in part by an interest,
41-12 including a lien or security interest, in real property that is:
41-13 (i) improved by a dwelling designed for
41-14 occupancy by four or fewer families; and
41-15 (ii) subject to one or more liens,
41-16 security interests, prior mortgages, or deeds of trust; and
41-17 (B) not to be repaid before the 91st day after
41-18 the date of the loan.
41-19 Art. 3A.002. INTEREST COMPUTATION METHODS. (a) The
41-20 scheduled installment earnings method is a method to compute an
41-21 interest charge by applying a daily rate to the unpaid balance of
41-22 the amount financed as if all payments will be made upon the
41-23 scheduled installment date. The daily rate is 1/365th of the
41-24 equivalent contract rate. Payments received before or after the
41-25 due date do not cause an adjustment in the amount of the scheduled
41-26 principal reduction.
41-27 (b) The true daily earnings method is a method to compute an
42-1 interest charge by applying a daily rate to the unpaid balance of
42-2 the amount financed. The daily rate is 1/365th of the equivalent
42-3 contract rate. The earned finance charge is computed by
42-4 multiplying the daily rate of the finance charge by the number of
42-5 days the actual principal balance is outstanding.
42-6 Art. 3A.003. PURCHASE FROM MORTGAGEE. For the purposes of
42-7 this chapter, a purchase from a mortgagee of an interest in a
42-8 secondary mortgage loan that was made to secure that loan is
42-9 treated as if it were a secondary mortgage loan.
42-10 Art. 3A.004. CONSTITUTIONAL INTEREST; EXEMPTION.
42-11 (a) Except as otherwise fixed by law, the maximum rate of interest
42-12 is 10 percent per year.
42-13 (b) A loan providing for a rate of interest that is 10
42-14 percent per year or less is not subject to this chapter.
42-15 Art. 3A.005. APPLICABILITY OF CHAPTER. (a) A loan is
42-16 subject to this chapter if the loan:
42-17 (1) provides for interest in excess of 10 percent per
42-18 year;
42-19 (2) is extended primarily for personal, family, or
42-20 household use;
42-21 (3) is not secured by a lien on real property; and
42-22 (4) is made by a person engaged in the business of
42-23 making, arranging, or negotiating those types of loans.
42-24 (b) A loan is subject to this chapter if the loan:
42-25 (1) provides for interest in excess of 10 percent per
42-26 year;
42-27 (2) is extended primarily for personal, family, or
43-1 household use;
43-2 (3) is predominantly payable in monthly installments;
43-3 (4) is described by Article 3A.001(3), 3A.501, or
43-4 3A.806; and
43-5 (5) is made by a person engaged in the business of
43-6 making, arranging, or negotiating those types of loans.
43-7 (c) This chapter does not apply to a secondary mortgage loan
43-8 made by a seller of property to secure all or part of the unpaid
43-9 purchase price.
43-10 SUBCHAPTER B. DESCRIPTION OF AND REQUIREMENTS FOR
43-11 AUTHORIZED ACTIVITIES
43-12 Art. 3A.101. AUTHORIZED ACTIVITIES; CEILING AMOUNT. (a) A
43-13 person must hold a license issued under this chapter or be a bank,
43-14 savings bank, or savings and loan association to:
43-15 (1) engage in the business of making, transacting, or
43-16 negotiating loans subject to this chapter; and
43-17 (2) contract for, charge, or receive, directly or
43-18 indirectly, in connection with a loan subject to this chapter, a
43-19 charge, including interest, compensation, consideration, or another
43-20 expense, authorized under this chapter that in the aggregate
43-21 exceeds the charges authorized under other law.
43-22 (b) A person may not use any device, subterfuge, or pretense
43-23 to evade the application of this article.
43-24 Art. 3A.102. ISSUANCE OF MORE THAN ONE LICENSE FOR A PERSON.
43-25 (a) The commissioner may issue more than one license to a person
43-26 on compliance with this chapter for each license.
43-27 (b) A person who is required to hold a license under this
44-1 chapter must hold a separate license for each office at which loans
44-2 are made, negotiated, or collected under this chapter.
44-3 (c) A license is not required under this chapter for a place
44-4 of business:
44-5 (1) devoted to accounting or other recordkeeping; and
44-6 (2) at which loans are not made, negotiated, or
44-7 collected under this chapter or Chapter 15.
44-8 Art. 3A.103. AREA OF BUSINESS; LOANS BY MAIL. (a) A lender
44-9 is not limited to making loans to residents of the community in
44-10 which the office for which the license or other authority is
44-11 granted.
44-12 (b) A lender may make, negotiate, arrange, and collect loans
44-13 by mail from a licensed office.
44-14 SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE
44-15 Art. 3A.201. APPLICATION REQUIREMENTS. (a) The application
44-16 for a license under this chapter must:
44-17 (1) be under oath;
44-18 (2) give the approximate location from which business
44-19 is to be conducted;
44-20 (3) identify the business's principal parties in
44-21 interest; and
44-22 (4) contain other relevant information that the
44-23 commissioner requires for the findings required under Article
44-24 3A.204.
44-25 (b) On the filing of one or more license applications, the
44-26 applicant shall pay to the commissioner an investigation fee of
44-27 $200.
45-1 (c) On the filing of each license application, the applicant
45-2 shall pay to the commissioner for the license's year of issuance a
45-3 license fee of:
45-4 (1) $100 if the license is granted not later than June
45-5 30; or
45-6 (2) $50 if the license is granted after June 30.
45-7 Art. 3A.202. BOND. (a) If the commissioner requires, an
45-8 applicant for a license under this chapter shall file with the
45-9 application a bond that is:
45-10 (1) in an amount not to exceed the total of:
45-11 (A) $5,000 for the first license; and
45-12 (B) $1,000 for each additional license;
45-13 (2) satisfactory to the commissioner; and
45-14 (3) issued by a surety company qualified to do
45-15 business as a surety in this state.
45-16 (b) The bond must be in favor of this state for the use of
45-17 this state and the use of a person who has a cause of action under
45-18 this chapter against the license holder.
45-19 (c) The bond must be conditioned on:
45-20 (1) the license holder's faithful performance under
45-21 this chapter and rules adopted under this chapter; and
45-22 (2) the payment of all amounts that become due to the
45-23 state or another person under this chapter during the calendar year
45-24 for which the bond is given.
45-25 (d) The aggregate liability of a surety to all persons
45-26 damaged by the license holder's violation of this chapter may not
45-27 exceed the amount of the bond.
46-1 Art. 3A.203. INVESTIGATION OF APPLICATION. On the filing of
46-2 an application and, if required, a bond, and on payment of the
46-3 required fees, the commissioner shall conduct an investigation to
46-4 determine whether to issue the license.
46-5 Art. 3A.204. APPROVAL OR DENIAL OF APPLICATION. (a) The
46-6 commissioner shall approve the application and issue to the
46-7 applicant a license to make loans under this chapter if the
46-8 commissioner finds that:
46-9 (1) the financial responsibility, experience,
46-10 character, and general fitness of the applicant are sufficient to:
46-11 (A) command the confidence of the public; and
46-12 (B) warrant the belief that the business will be
46-13 operated lawfully and fairly, within the purposes of this chapter;
46-14 and
46-15 (2) the applicant has net assets of at least $25,000
46-16 available for the operation of the business.
46-17 (b) If the commissioner does not find the eligibility
46-18 requirements of Subsection (a), the commissioner shall notify the
46-19 applicant.
46-20 (c) If an applicant requests a hearing on the application
46-21 not later than the 30th day after the date of notification under
46-22 Subsection (b), the applicant is entitled to a hearing not later
46-23 than the 60th day after the date of the request.
46-24 (d) The commissioner shall approve or deny the application
46-25 not later than the 60th day after the date of the filing of a
46-26 completed application with payment of the required fees, or if a
46-27 hearing is held, after the date of the completion of the hearing on
47-1 the application. The commissioner and the applicant may agree to a
47-2 later date in writing.
47-3 Art. 3A.205. DISPOSITION OF FEES ON DENIAL OF APPLICATION.
47-4 If the commissioner denies the application, the commissioner shall
47-5 retain the investigation fee and shall return to the applicant the
47-6 license fee submitted with the application.
47-7 SUBCHAPTER D. LICENSE
47-8 Art. 3A.251. NAME AND PLACE ON LICENSE. (a) A license must
47-9 state:
47-10 (1) the name of the license holder; and
47-11 (2) the address of the office from which the business
47-12 is to be conducted.
47-13 (b) A license holder may not conduct business under this
47-14 chapter under a name or at a place of business in this state other
47-15 than the name or office stated on the license.
47-16 Art. 3A.252. LICENSE DISPLAY. A license holder shall
47-17 display a license at the place of business provided on the license.
47-18 Art. 3A.253. MINIMUM ASSETS FOR LICENSE. (a) Except as
47-19 provided by Subsection (b) or (c), a license holder shall maintain
47-20 for each office for which a license is held net assets of at least
47-21 $25,000 that are used or readily available for use in conducting
47-22 the business of that office.
47-23 (b) A license holder who held a license under the Texas
47-24 Regulatory Loan Act and was issued a license to make loans under
47-25 that chapter as provided by Section 4, Chapter 274, Acts of the
47-26 60th Legislature, Regular Session, 1967, shall maintain for the
47-27 office for which that license is held net assets of at least
48-1 $15,000 that are used or readily available for use in conducting
48-2 the business of that office.
48-3 (c) A license holder who paid the pawnbroker's occupational
48-4 tax for 1967 and was issued a license to make loans under that
48-5 chapter as provided by Section 4, Chapter 274, Acts of the 60th
48-6 Legislature, Regular Session, 1967, is exempt from the minimum
48-7 assets requirement of Subsection (a) for the office for which that
48-8 license is held.
48-9 (d) If a license holder holds a license to which Subsection
48-10 (b) or (c) applies and subsequently transfers the license to
48-11 another person, the minimum assets required under Subsection (a)
48-12 shall apply to the license and the subsequent license holder.
48-13 Art. 3A.254. ANNUAL LICENSE FEE. (a) Not later than
48-14 December 1, a license holder shall pay to the commissioner for each
48-15 license held an annual fee for the year beginning the next January
48-16 1.
48-17 (b) The annual fee for a license under this chapter is $200
48-18 except that if, on September 30 preceding the date on which the
48-19 annual fee is due, the gross unpaid balance of loans regulated
48-20 under this chapter in the office for which the license is issued is
48-21 $100,000 or less, the annual fee is $100.
48-22 Art. 3A.255. EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL
48-23 FEE. If the annual fee for a license is not paid before the 16th
48-24 day after the date on which the written notice of delinquency of
48-25 payment has been given to the license holder, the license expires
48-26 on the later of:
48-27 (1) that day; or
49-1 (2) December 31 of the last year for which an annual
49-2 fee was paid.
49-3 Art. 3A.256. LICENSE SUSPENSION OR REVOCATION. After notice
49-4 and a hearing the commissioner may suspend or revoke a license if
49-5 the commissioner finds that:
49-6 (1) the license holder failed to pay the annual
49-7 license fee, an examination fee, an investigation fee, or another
49-8 charge imposed by the commissioner under this chapter;
49-9 (2) the license holder, knowingly or without the
49-10 exercise of due care, violated this chapter or a rule adopted or
49-11 order issued under this chapter; or
49-12 (3) a fact or condition exists that, if it had existed
49-13 or had been known to exist at the time of the original application
49-14 for the license, clearly would have justified the commissioner's
49-15 denial of the application.
49-16 Art. 3A.257. CORPORATE CHARTER FORFEITURE. (a) A license
49-17 holder who violates this chapter is subject to revocation of the
49-18 holder's license and, if the license holder is a corporation,
49-19 forfeiture of its charter.
49-20 (b) When the attorney general is notified of a violation of
49-21 this chapter and revocation of a license, the attorney general
49-22 shall file suit in a district court in Travis County, if the
49-23 license holder is a corporation, for forfeiture of the license
49-24 holder's charter.
49-25 Art. 3A.258. LICENSE SUSPENSION OR REVOCATION FILED WITH
49-26 PUBLIC RECORDS. The decision of the commissioner on the suspension
49-27 or revocation of a license and the evidence considered by the
50-1 commissioner in making the decision shall be filed in the public
50-2 records of the commissioner.
50-3 Art. 3A.259. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE OF
50-4 NEW LICENSE AFTER REVOCATION. The commissioner may reinstate a
50-5 suspended license or issue a new license on application to a person
50-6 whose license has been revoked if at the time of the reinstatement
50-7 or issuance no fact or condition exists that clearly would have
50-8 justified the commissioner's denial of an original application for
50-9 the license.
50-10 Art. 3A.260. SURRENDER OF LICENSE. A license holder may
50-11 surrender a license issued under this chapter by delivering to the
50-12 commissioner:
50-13 (1) the license; and
50-14 (2) a written notice of the license's surrender.
50-15 Art. 3A.261. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR
50-16 SURRENDER. (a) The suspension, revocation, or surrender of a
50-17 license issued under this chapter does not affect the obligation of
50-18 a contract between the license holder and a debtor entered into
50-19 before the revocation, suspension, or surrender.
50-20 (b) Surrender of a license does not affect the license
50-21 holder's civil or criminal liability for an act committed before
50-22 surrender.
50-23 Art. 3A.262. MOVING AN OFFICE. (a) A license holder shall
50-24 give written notice to the commissioner before the 30th day
50-25 preceding the date the license holder moves an office from the
50-26 location provided on the license.
50-27 (b) The commissioner shall amend a holder's license
51-1 accordingly.
51-2 Art. 3A.263. TRANSFER OR ASSIGNMENT OF LICENSE. A license
51-3 may be transferred or assigned only with the approval of the
51-4 commissioner.
51-5 SUBCHAPTER E. INTEREST CHARGES ON NON-REAL PROPERTY LOANS
51-6 Art. 3A.301. MAXIMUM INTEREST CHARGE. (a) A loan contract
51-7 under this chapter that is a regular transaction and is not secured
51-8 by real property may provide for an interest charge on the cash
51-9 advance that does not exceed the amount of add-on interest equal to
51-10 the amount computed for the full term of the contract at an add-on
51-11 interest amount equal to:
51-12 (1) $18 for each $100 per year on the part of the cash
51-13 advance that is less than or equal to the amount computed under
51-14 Article 2.08, using the reference base amount of $300; and
51-15 (2) $8 for each $100 per year on the part of the cash
51-16 advance that is more than the amount computed for Subdivision (1)
51-17 but less than or equal to an amount computed under Article 2.08,
51-18 using the reference base amount of $2,500.
51-19 (b) For the purpose of Subsection (a):
51-20 (1) when the loan is made an interest charge may be
51-21 computed for the full term of the loan contract;
51-22 (2) if the period before the first installment due
51-23 date includes a part of a month that is longer than 15 days, then
51-24 that portion of a month may be considered a full month; and
51-25 (3) if a loan contract provides for precomputed
51-26 interest, the amount of the loan is the total of:
51-27 (A) the cash advance; and
52-1 (B) the amount of precomputed interest.
52-2 (c) A loan contract under this chapter that is an irregular
52-3 transaction and is not secured by real property may provide for an
52-4 interest charge, using any method or formula, that does not exceed
52-5 the amount that, having due regard for the schedule of installment
52-6 payments, would produce the same effective return as allowed under
52-7 Subsection (a) if the loan were payable in equal successive monthly
52-8 installments beginning one month from the date of the contract.
52-9 (d) A loan contract under this chapter that is not secured
52-10 by real property may provide for a rate or amount of interest
52-11 computed using the true daily earnings method or the scheduled
52-12 installment earnings method that does not exceed the alternative
52-13 interest rate as computed under Subchapter A, Chapter 1D. Interest
52-14 may accrue on the principal balance and amounts added to principal
52-15 after the date of the loan contract from time to time unpaid at the
52-16 rate provided for by the contract until the date of payment in full
52-17 or demand for payment in full.
52-18 Art. 3A.302. MAXIMUM CHARGE FOR LOAN WITH SINGLE REPAYMENT.
52-19 A loan contract that exceeds the maximum cash advance of Article
52-20 3A.401 and that is payable in a single installment may provide for
52-21 an interest charge on the cash advance that does not exceed a rate
52-22 or amount that would produce the same effective return as allowed
52-23 under Article 3A.301 having due consideration for the amount and
52-24 term of the loan. If a loan under this article is prepaid in full,
52-25 the lender may earn a minimum interest charge of $25.
52-26 Art. 3A.303. ADDITIONAL INTEREST FOR DEFAULT: REGULAR
52-27 TRANSACTION. (a) A loan contract that includes precomputed
53-1 interest and that is a regular transaction may provide for
53-2 additional interest for default if any part of an installment
53-3 remains unpaid after the 10th day after the date on which the
53-4 installment is due, including Sundays and holidays.
53-5 (b) A loan contract that uses the scheduled installment
53-6 earnings method and that is a regular transaction may provide for
53-7 additional interest for default if any part of an installment
53-8 remains unpaid after the 10th day after the date on which the
53-9 installment is due, including Sundays and holidays.
53-10 (c) The additional interest may not exceed five cents for
53-11 each $1 of a scheduled installment.
53-12 (d) Interest under this article may not be collected more
53-13 than once on the same installment.
53-14 Art. 3A.304. ADDITIONAL INTEREST FOR INSTALLMENT DEFERMENT:
53-15 REGULAR TRANSACTION. (a) On a loan contract that includes
53-16 precomputed interest and is a regular transaction, an authorized
53-17 lender may charge additional interest for the deferment of an
53-18 installment if:
53-19 (1) the entire amount of the installment is unpaid;
53-20 (2) no interest for default has been collected on the
53-21 installment; and
53-22 (3) payment of the installment is deferred for one or
53-23 more full months and the maturity of the contract is extended for a
53-24 corresponding period.
53-25 (b) The interest for deferment under Subsection (a) may not
53-26 exceed the amount computed by:
53-27 (1) taking the difference between the refund that
54-1 would be required for prepayment in full as of the date of
54-2 deferment and the refund that would be required for prepayment in
54-3 full one month before the date of deferment; and
54-4 (2) multiplying the results under Subdivision (1) by
54-5 the number of months in the deferment period.
54-6 (c) The amount of interest applicable to each deferred
54-7 balance or installment period occurring after a deferment period
54-8 remains the amount applicable to that balance or period under the
54-9 original loan contract.
54-10 (d) If a loan is prepaid in full during the deferment
54-11 period, the borrower shall receive, in addition to the refund
54-12 required under Subchapter H, a pro rata refund of that part of the
54-13 interest for deferment applicable to the number of full months
54-14 remaining in the deferment period on the payment date.
54-15 (e) For the purposes of this article, a deferment period is
54-16 the period during which a payment is not required or made because
54-17 of the deferment and begins on the day after the due date of the
54-18 scheduled installment that precedes the first installment being
54-19 deferred.
54-20 Art. 3A.305. COLLECTION OF DEFAULT OR DEFERMENT INTEREST.
54-21 Interest for default under Article 3A.303 or for installment
54-22 deferment under Article 3A.304 may be collected when it accrues or
54-23 at any time after it accrues.
54-24 Art. 3A.306. ADDITIONAL INTEREST FOR DEFAULT: IRREGULAR
54-25 TRANSACTION. A loan contract that includes precomputed interest
54-26 and that is an irregular transaction may provide for additional
54-27 interest for default using the true daily earnings method for the
55-1 period from the maturity date of an installment until the date the
55-2 installment is paid. The rate of the additional interest may not
55-3 exceed the maximum contract interest rate.
55-4 SUBCHAPTER F. ALTERNATE CHARGES FOR CERTAIN LOANS
55-5 Art. 3A.401. MAXIMUM CASH ADVANCE. The maximum cash advance
55-6 of a loan made under this subchapter is an amount computed under
55-7 Article 2.08, using the reference base amount of $100.
55-8 Art. 3A.402. ALTERNATE INTEREST CHARGE. Instead of the
55-9 charges authorized by Article 3A.301, a loan contract may provide
55-10 for:
55-11 (1) on a cash advance of less than $30, an acquisition
55-12 charge that is not more than $1 for each $5 of the cash advance;
55-13 (2) on a cash advance equal to or more than $30 but
55-14 not more than $100:
55-15 (A) an acquisition charge that is not more than
55-16 the amount equal to one-tenth of the amount of the cash advance;
55-17 and
55-18 (B) an installment account handling charge that
55-19 is not more than:
55-20 (i) $3 a month if the cash advance is not
55-21 more than $35;
55-22 (ii) $3.50 a month if the cash advance is
55-23 more than $35 but not more than $70; or
55-24 (iii) $4 a month if the cash advance is
55-25 more than $70; or
55-26 (3) on a cash advance of more than $100:
55-27 (A) an acquisition charge that is not more than
56-1 $10; and
56-2 (B) an installment account handling charge that
56-3 is not more than the ratio of $4 a month for each $100 of cash
56-4 advance.
56-5 Art. 3A.403. MAXIMUM INTEREST CHARGE FOR LOAN WITH SINGLE
56-6 REPAYMENT. A loan contract to which Article 3A.401 applies and
56-7 that is payable in a single installment may provide for an
56-8 acquisition charge and an interest charge on the cash advance that
56-9 does not exceed a rate or amount that would produce the same
56-10 effective return as allowed under Article 3A.402 having due
56-11 consideration for the amount and term of the loan. If a loan under
56-12 this article is prepaid in full, the lender may earn a minimum of
56-13 the acquisition charge and interest charge for one month.
56-14 Art. 3A.404. NO OTHER CHARGES AUTHORIZED. (a) On a loan
56-15 made under this subchapter a lender may not contract for, charge,
56-16 or receive an amount unless this subchapter authorizes the amount
56-17 to be charged.
56-18 (b) An insurance charge is not authorized on a loan made
56-19 under this subchapter.
56-20 Art. 3A.405. MAXIMUM LOAN TERM. The maximum term of a loan
56-21 made under this subchapter is:
56-22 (1) for a loan of $100 or less the lesser of:
56-23 (A) one month for each multiple of $10 of cash
56-24 advance; or
56-25 (B) six months; and
56-26 (2) for a loan of more than $100, one month for each
56-27 multiple of $20 of cash advance.
57-1 Art. 3A.406. REFUND. (a) An acquisition charge authorized
57-2 under Article 3A.402(1) or (2) is considered to be earned at the
57-3 time a loan is made and is not subject to refund.
57-4 (b) On the prepayment of a loan with a cash advance of $30
57-5 or more but not more than $100, the installment account handling
57-6 charge authorized under Article 3A.402(2) is subject to refund in
57-7 accordance with Subchapter H.
57-8 (c) On the prepayment of a loan with a cash advance of more
57-9 than $100, the acquisition charge and the installment account
57-10 handling charge authorized under Article 3A.402(3) are subject to
57-11 refund in accordance with Subchapter H.
57-12 Art. 3A.407. DEFAULT CHARGE; DEFERMENT OF PAYMENT. The
57-13 provisions of Subchapter E relating to additional interest for
57-14 default and additional interest for the deferment of installments
57-15 apply to a loan made under this subchapter.
57-16 Art. 3A.408. SCHEDULES FOR WEEKLY, BIWEEKLY, OR SEMIMONTHLY
57-17 INSTALLMENTS. The commissioner may prepare schedules that may be
57-18 used by an authorized lender for the repayment of a loan made under
57-19 this subchapter by weekly, biweekly, or semimonthly installments.
57-20 SUBCHAPTER G. INTEREST AND OTHER CHARGES ON SECONDARY
57-21 MORTGAGE LOANS
57-22 Art. 3A.501. MAXIMUM INTEREST CHARGE. (a) A secondary
57-23 mortgage loan that is a regular transaction may provide for an
57-24 interest charge on the cash advance that is precomputed and that
57-25 does not exceed a rate or amount that would produce the same
57-26 effective return as allowed under Subchapter A, Chapter 1D.
57-27 (b) For the purpose of Subsection (a):
58-1 (1) when the loan is made an interest charge may be
58-2 computed for the full term of the loan contract;
58-3 (2) if the period before the first installment due
58-4 date includes a part of a month that is longer than 15 days, that
58-5 portion of a month may be considered a full month; and
58-6 (3) if a loan contract provides for precomputed
58-7 interest, the amount of the loan is the total of:
58-8 (A) the cash advance; and
58-9 (B) the amount of precomputed interest.
58-10 (c) A secondary mortgage loan may provide for a rate or
58-11 amount of interest calculated using the true daily earnings method
58-12 or the scheduled installment earnings method that does not exceed
58-13 the alternative rate ceiling in Subchapter A, Chapter 1D. Interest
58-14 may accrue on the principal balance and amounts added to principal
58-15 after the date of the loan contract from time to time unpaid at the
58-16 rate provided for by the contract until the date of payment in full
58-17 or demand for payment in full. An interest charge under this
58-18 subsection may not be precomputed.
58-19 Art. 3A.502. ADDITIONAL INTEREST FOR DEFAULT: REGULAR
58-20 TRANSACTION. (a) A secondary mortgage loan that includes
58-21 precomputed interest and that is a regular transaction may provide
58-22 for additional interest for default if any part of an installment
58-23 remains unpaid after the 10th day after the date on which the
58-24 installment is due, including Sundays and holidays.
58-25 (b) A secondary mortgage loan contract that uses the
58-26 scheduled installment earnings method and that is a regular
58-27 transaction may provide for additional interest for default if any
59-1 part of an installment remains unpaid after the 10th day after the
59-2 date on which the installment is due, including Sundays and
59-3 holidays.
59-4 (c) The additional interest for default may not exceed five
59-5 cents for each $1 of a scheduled installment.
59-6 (d) Interest under this article may not be collected more
59-7 than once on the same installment.
59-8 Art. 3A.503. ADDITIONAL INTEREST FOR INSTALLMENT DEFERMENT:
59-9 REGULAR TRANSACTIONS. (a) On a secondary mortgage loan that
59-10 includes precomputed interest and is a regular transaction, an
59-11 authorized lender may charge additional interest for the deferment
59-12 of an installment if:
59-13 (1) the entire amount of the installment is unpaid;
59-14 (2) no interest for default has been collected on the
59-15 installment; and
59-16 (3) payment of the installment is deferred for one or
59-17 more full months and the maturity of the contract is extended for a
59-18 corresponding period.
59-19 (b) The interest for deferment under Subsection (a) may not
59-20 exceed the amount computed by:
59-21 (1) taking the difference between the refund that
59-22 would be required for prepayment in full as of the date of
59-23 deferment and the refund that would be required for prepayment in
59-24 full one month before the date of deferment; and
59-25 (2) multiplying the results under Subdivision (1) by
59-26 the number of months in the deferment period.
59-27 (c) The amount of interest applicable to each deferred
60-1 balance or installment period occurring after a deferment period
60-2 remains the amount applicable to that balance or period under the
60-3 original loan contract.
60-4 (d) If a loan is prepaid in full during the deferment
60-5 period, the borrower shall receive, in addition to the refund
60-6 required under Subchapter H, a pro rata refund of that part of the
60-7 interest for deferment applicable to the number of full months
60-8 remaining in the deferment period on the payment date.
60-9 (e) For the purposes of this article, a deferment period is
60-10 the period during which a payment is not required or made because
60-11 of the deferment and begins on the day after the due date of the
60-12 scheduled installment that precedes the first installment being
60-13 deferred.
60-14 Art. 3A.504. COLLECTION OF DEFAULT OR DEFERMENT INTEREST.
60-15 Interest for default under Article 3A.502 or for installment
60-16 deferment under Article 3A.503 may be collected when it accrues or
60-17 at any time after it accrues.
60-18 Art. 3A.505. ADDITIONAL INTEREST FOR DEFAULT: IRREGULAR
60-19 TRANSACTION. A secondary mortgage loan that includes precomputed
60-20 interest and that is an irregular transaction may provide for
60-21 additional interest for default using the true daily earnings
60-22 method for the period from the maturity date of an installment
60-23 until the date the installment is paid. The rate of the additional
60-24 interest may not exceed the maximum contract interest rate.
60-25 Art. 3A.506. DATE OF FIRST SCHEDULED INSTALLMENT. On a
60-26 secondary mortgage loan made under this chapter the due date of the
60-27 first installment may not be scheduled later than three months
61-1 after the date of the loan.
61-2 Art. 3A.507. AMOUNTS AUTHORIZED TO BE INCLUDED IN CONTRACT.
61-3 A secondary mortgage loan contract may provide for:
61-4 (1) reasonable fees or charges paid to the trustee in
61-5 connection with a deed of trust or similar instrument executed in
61-6 connection with the secondary mortgage loan, including fees for
61-7 enforcing the lien against or posting for sale, selling, or
61-8 releasing the property secured by the deed of trust;
61-9 (2) reasonable fees paid to an attorney who is not an
61-10 employee of the creditor in the collection of a delinquent
61-11 secondary mortgage loan;
61-12 (3) court costs and fees incurred in the collection of
61-13 the loan or foreclosure of a lien created by the loan; or
61-14 (4) a fee that does not exceed $15 for the return by a
61-15 depository institution of a dishonored check, negotiable order of
61-16 withdrawal, or share draft offered in full or partial payment of a
61-17 secondary mortgage loan.
61-18 Art. 3A.508. AMOUNTS AUTHORIZED TO BE COLLECTED OR ADDED TO
61-19 LOAN. (a) A lender or a person who is assigned a secondary
61-20 mortgage loan may collect on or before the closing of the loan, or
61-21 include in the principal of the loan:
61-22 (1) reasonable fees for:
61-23 (A) title examination and preparation of an
61-24 abstract of title by:
61-25 (i) an attorney who is not an employee of
61-26 the lender; or
61-27 (ii) a title company or property search
62-1 company authorized to do business in this state; or
62-2 (B) premiums or fees for title insurance or
62-3 title search for the benefit of the mortgagee and, at the
62-4 mortgagor's option, for title insurance or title search for the
62-5 benefit of the mortgagor;
62-6 (2) reasonable fees charged to the lender by an
62-7 attorney who is not a salaried employee of the lender for
62-8 preparation of the loan documents in connection with the mortgage
62-9 loan if the fees are evidenced by a statement for services rendered
62-10 addressed to the lender;
62-11 (3) charges prescribed by law that are paid to public
62-12 officials for determining the existence of a security interest or
62-13 for perfecting, releasing, or satisfying a security interest;
62-14 (4) reasonable fees for an appraisal of real property
62-15 offered as security for the loan prepared by a certified appraiser
62-16 who is not a salaried employee of the lender;
62-17 (5) the reasonable cost of a credit report;
62-18 (6) reasonable fees for a survey of real property
62-19 offered as security for the loan prepared by a registered surveyor
62-20 who is not a salaried employee of the lender;
62-21 (7) the premiums received in connection with the sale
62-22 of credit life insurance, credit accident and health insurance, or
62-23 other insurance that protects the mortgagee against default by the
62-24 mortgagor, the benefits of which are applied in whole or in part to
62-25 reduce or extinguish the loan balance; and
62-26 (8) reasonable fees relating to real property offered
62-27 as security for the loan that are incurred to comply with a
63-1 federally mandated program if the collection of the fees or the
63-2 participation in the program is required by a federal agency.
63-3 (b) Premiums for property insurance that conforms with
63-4 Article 3A.701 may be added to the loan contract.
63-5 SUBCHAPTER H. REFUND OF PRECOMPUTED INTEREST
63-6 Art. 3A.601. REFUND OF PRECOMPUTED INTEREST: REGULAR
63-7 TRANSACTION. (a) This article applies to a loan contract that
63-8 includes precomputed interest and that is a regular transaction.
63-9 (b) If the contract is prepaid in full, including payment in
63-10 cash or by a new loan or renewal of the loan, or if the lender
63-11 demands payment in full of the unpaid balance, after the first
63-12 installment due date but before the final installment due date, the
63-13 lender shall refund or credit to the borrower the amount computed
63-14 by:
63-15 (1) dividing the sum of the periodic balances
63-16 scheduled to follow the installment date after the date of the
63-17 prepayment or demand, as appropriate, by the sum of all the
63-18 periodic balances under the schedule of payments set out in the
63-19 loan contract; and
63-20 (2) multiplying the total interest contracted for
63-21 under Article 3A.301, 3A.402, or 3A.501, as appropriate, by the
63-22 result under Subdivision (1).
63-23 (c) If the prepayment in full or demand for payment in full
63-24 occurs before the first installment due date, the lender shall:
63-25 (1) retain an amount computed by:
63-26 (A) dividing 30 into the amount that could be
63-27 retained if the first installment period were one month and the
64-1 loan were prepaid in full on the date the first installment is due;
64-2 and
64-3 (B) multiplying the result under Paragraph (A)
64-4 by the number of days in the period beginning on the date the loan
64-5 was made and ending on the date of the prepayment or demand; and
64-6 (2) refund or credit to the borrower the amount
64-7 computed by subtracting the amount retained under Subdivision (1)
64-8 from the interest contracted for under Article 3A.301, 3A.402, or
64-9 3A.501, as appropriate.
64-10 Art. 3A.602. REFUND OF PRECOMPUTED INTEREST ON CONTRACT:
64-11 IRREGULAR TRANSACTION OR TERM OF MORE THAN 60 MONTHS. (a) This
64-12 article applies to a loan contract that:
64-13 (1) includes precomputed interest and to which Article
64-14 3A.601 does not apply; or
64-15 (2) has a term of more than 60 months.
64-16 (b) If the contract is prepaid in full, including payment in
64-17 cash or by a new loan or renewal of the loan, or if the lender
64-18 demands payment in full of the unpaid balance before final maturity
64-19 of the contract, the lender earns interest for the period beginning
64-20 on the date of the loan and ending on the date of the prepayment or
64-21 demand, as applicable, an amount that does not exceed the amount
64-22 allowed by Subsection (f) using the simple annual interest rate
64-23 under the contract.
64-24 (c) If prepayment in full or demand for payment in full
64-25 occurs during an installment period, the lender may retain, in
64-26 addition to interest that accrued during any elapsed installment
64-27 periods, an amount computed by:
65-1 (1) multiplying the simple annual interest rate under
65-2 the contract by the unpaid principal balance of the loan determined
65-3 according to the schedule of payments to be outstanding on the
65-4 immediately preceding installment due date;
65-5 (2) dividing 365 into the product under Subdivision
65-6 (1); and
65-7 (3) multiplying the number of days in the period
65-8 beginning on the day after the installment due date and ending on
65-9 the date of the prepayment or demand, as appropriate, by the result
65-10 obtained under Subdivision (2).
65-11 (d) The lender may also earn interest on an addition to
65-12 principal, or other permissible charges, added to the loan after
65-13 the date of the loan contract, accruing at the simple annual
65-14 interest rate under the contract from the date of the addition
65-15 until the date paid or the date the lender demands payment in full
65-16 of the total unpaid balance under the loan contract.
65-17 (e) The lender shall refund or credit to the borrower the
65-18 amount computed by subtracting the total amount retained under
65-19 Subsections (b), (c), and (d) from the total amount of interest
65-20 contracted for and precomputed in the amount of loan.
65-21 (f) For the purposes of this article, the simple annual
65-22 interest rate under a contract is equal to the rate that the
65-23 contract would have produced over its full term if, assuming that
65-24 each scheduled payment under the contract is paid on the date due
65-25 and considering the amount of each scheduled installment and the
65-26 time of each scheduled installment period, the rate were applied to
65-27 the unpaid principal amounts determined to be outstanding from time
66-1 to time according to the schedule of payments.
66-2 Art. 3A.603. NO REFUND ON PARTIAL PREPAYMENT OR OF AMOUNT
66-3 LESS THAN $1. A refund is not required under this subchapter for a
66-4 partial prepayment or if the amount to be refunded is less than $1.
66-5 SUBCHAPTER I. INSURANCE
66-6 Art. 3A.701. REQUIRED PROPERTY INSURANCE. (a) On a loan
66-7 that is subject to Subchapter E with a cash advance of $300 or
66-8 more, a lender may request or require a borrower to insure tangible
66-9 personal property offered as security for the loan.
66-10 (b) On a secondary mortgage loan, a lender may request or
66-11 require a borrower to provide property insurance as security
66-12 against reasonable risks of loss, damage, and destruction.
66-13 (c) The insurance coverage and the premiums or charges for
66-14 the coverage must bear a reasonable relationship to:
66-15 (1) the amount, term, and conditions of the loan;
66-16 (2) the value of the collateral; and
66-17 (3) the existing hazards or risk of loss, damage, or
66-18 destruction.
66-19 (d) The insurance may not:
66-20 (1) cover unusual or exceptional risks; or
66-21 (2) provide coverage not ordinarily included in
66-22 policies issued to the general public.
66-23 (e) A creditor may not require the purchase of duplicate
66-24 property insurance if the creditor has knowledge that the borrower:
66-25 (1) has valid and collectible insurance covering the
66-26 property; and
66-27 (2) has provided a loss payable endorsement sufficient
67-1 to protect the creditor.
67-2 (f) For purposes of determining the knowledge required under
67-3 Subsection (e), a creditor may rely on a written consent to
67-4 purchase insurance in which the borrower is given the opportunity
67-5 to disclose the existence of other coverage.
67-6 Art. 3A.702. CREDIT LIFE INSURANCE, CREDIT HEALTH AND
67-7 ACCIDENT INSURANCE, OR INVOLUNTARY UNEMPLOYMENT INSURANCE. (a) On
67-8 a loan made under this chapter that is subject to Subchapter E with
67-9 a cash advance of $100 or more, a lender may:
67-10 (1) offer or request that a borrower provide credit
67-11 life insurance and credit health and accident insurance as
67-12 additional protection for the loan; and
67-13 (2) offer involuntary unemployment insurance to the
67-14 borrower at the time the loan is made.
67-15 (b) A lender may not require that the borrower accept or
67-16 provide the insurance described by Subsection (a).
67-17 (c) On a secondary mortgage loan made under this chapter, a
67-18 lender may request or require that a borrower provide credit life
67-19 insurance and credit accident and health insurance as additional
67-20 protection for the loan.
67-21 Art. 3A.703. MAXIMUM AMOUNT OF INSURANCE COVERAGE. (a) At
67-22 any time the total amount of the policies of credit life insurance
67-23 in force on one borrower on one loan contract may not exceed the
67-24 greater of:
67-25 (1) the total amount repayable under the loan contract
67-26 if the loan is an irregular transaction; or
67-27 (2) the greater of the scheduled or actual amount of
68-1 unpaid indebtedness if the loan is a regular transaction.
68-2 (b) At any time the total amount of the policies of credit
68-3 accident and health insurance or involuntary unemployment insurance
68-4 in force on one borrower on one loan contract may not exceed the
68-5 total amount repayable under the loan contract, and the amount of
68-6 each periodic indemnity payment may not exceed the scheduled
68-7 periodic installment payment on the loan.
68-8 Art. 3A.704. INSURANCE NOTICE. (a) If insurance is
68-9 required on a loan made under this chapter, the lender shall give
68-10 to the borrower written notice that clearly and conspicuously
68-11 states that:
68-12 (1) insurance is required in connection with the loan;
68-13 and
68-14 (2) the borrower as an option may furnish the required
68-15 insurance coverage through an insurance policy that is in existence
68-16 and that is owned or controlled by the borrower or an insurance
68-17 policy obtained from an insurance company authorized to do business
68-18 in this state.
68-19 (b) If insurance requested or required on a loan made under
68-20 this chapter is sold or obtained by a lender at a premium or rate
68-21 of charge that is not fixed or approved by the commissioner of
68-22 insurance, the lender shall notify the borrower of that fact. If
68-23 notice is required under Subsection (a), the lender shall include
68-24 that fact in the notice required by Subsection (a).
68-25 (c) A notice required under this article may be:
68-26 (1) a separate writing delivered with the loan
68-27 contract; or
69-1 (2) a part of the loan contract.
69-2 Art. 3A.705. INSURANCE MAY BE FURNISHED BY BORROWER. (a)
69-3 If insurance is required on a loan made under this chapter, the
69-4 borrower may furnish the insurance coverage through an insurance
69-5 policy that is in existence and that is owned or controlled by the
69-6 borrower or an insurance policy obtained by the borrower from an
69-7 insurance company authorized to do business in this state.
69-8 (b) If insurance is required on a loan made under this
69-9 chapter and the insurance is sold or obtained by the lender at a
69-10 premium or rate of charge that is not fixed or approved by the
69-11 commissioner of insurance, the borrower has the option of
69-12 furnishing the required insurance under this article at any time
69-13 before the sixth day after the date of the loan.
69-14 Art. 3A.706. BORROWER'S FAILURE TO PROVIDE REQUIRED
69-15 INSURANCE. (a) If a borrower fails to obtain or maintain
69-16 insurance coverage required under a loan contract or requests the
69-17 lender to obtain that coverage, the lender may obtain substitute
69-18 insurance coverage that is substantially equivalent to or more
69-19 limited than the coverage originally required.
69-20 (b) If a loan is subject to Subchapter E, the lender may
69-21 obtain insurance to cover only the interest of the lender as a
69-22 secured party if the borrower does not request that the borrower's
69-23 interest be covered.
69-24 (c) Insurance obtained under this article must comply with
69-25 Articles 3A.707 and 3A.708.
69-26 (d) The lender may add the amount advanced by the lender for
69-27 insurance coverage obtained under this article to the unpaid
70-1 balance of the loan contract and may charge interest on that amount
70-2 from the time it is added to the unpaid balance until it is paid.
70-3 The rate of additional interest may not exceed the rate that the
70-4 loan contract would produce over its full term if each scheduled
70-5 payment were paid on the due date.
70-6 Art. 3A.707. REQUIREMENTS FOR INCLUDING INSURANCE CHARGE IN
70-7 CONTRACT. Insurance for which a charge is included in a loan
70-8 contract must be written:
70-9 (1) at lawful rates;
70-10 (2) in accordance with the Insurance Code; and
70-11 (3) by a company authorized to do business in this
70-12 state.
70-13 Art. 3A.708. FURNISHING OF INSURANCE DOCUMENT TO BORROWER.
70-14 If a lender obtains insurance for which a charge is included in the
70-15 loan contract, the lender, not later than the 30th day after the
70-16 date on which the loan contract is executed, shall deliver, mail,
70-17 or cause to be mailed to the borrower at the borrower's address
70-18 specified in the contract one or more policies or certificates of
70-19 insurance that clearly set forth:
70-20 (1) the amount of the premium;
70-21 (2) the kind of insurance provided;
70-22 (3) the coverage of the insurance; and
70-23 (4) all terms, including options, limitations,
70-24 restrictions, and conditions, of each insurance policy.
70-25 Art. 3A.709. LENDER'S DUTY IF INSURANCE IS ADJUSTED OR
70-26 TERMINATED. (a) If insurance for which a charge is included in or
70-27 added to the loan contract is canceled, adjusted, or terminated,
71-1 the lender shall:
71-2 (1) credit to the amount unpaid on the loan the amount
71-3 of the refund received by the lender for unearned insurance
71-4 premiums, less the amount of the refund that is applied to the
71-5 purchase by the lender of similar insurance; and
71-6 (2) if the amount to be credited under Subdivision (1)
71-7 is more than the unpaid balance, refund promptly to the borrower
71-8 the difference between those amounts.
71-9 (b) A cash refund is not required under this article if the
71-10 amount of the refund is less than $1.
71-11 Art. 3A.710. PAYMENT FOR INSURANCE FROM LOAN PROCEEDS. A
71-12 lender, including an officer, agent, or employee of the lender, who
71-13 accepts insurance under this subchapter as protection for a loan:
71-14 (1) may deduct the premium or identifiable charge for
71-15 the insurance from the proceeds of the loan; and
71-16 (2) shall pay the deducted amounts to the insurance
71-17 company writing the insurance.
71-18 Art. 3A.711. INSURANCE GAIN NOT INTEREST. Any gain, or
71-19 advantage to the lender or the lender's employee, officer,
71-20 director, agent, general agent, affiliate, or associate from
71-21 insurance under this subchapter or the provision or sale of
71-22 insurance under this subchapter is not additional interest or an
71-23 additional charge in connection with a loan made under this chapter
71-24 except as specifically provided by this chapter.
71-25 Art. 3A.712. ACTION UNDER SUBCHAPTER NOT SALE OF INSURANCE.
71-26 Arranging for insurance or collecting an identifiable charge as
71-27 authorized by this subchapter is not a sale of insurance.
72-1 Art. 3A.713. REQUIRED AGENT OR BROKER PROHIBITED. A lender
72-2 may not by any direct or indirect method require the purchase of
72-3 insurance from an agent or broker designated by the lender.
72-4 Art. 3A.714. DECLINATION OF EQUAL INSURANCE COVERAGE
72-5 PROHIBITED. A lender may not decline at any time existing
72-6 insurance coverage providing substantially equal benefits that
72-7 comply with this subchapter.
72-8 Art. 3A.715. EFFECT OF UNAUTHORIZED INSURANCE CHARGE. (a)
72-9 If a lender charges for insurance an amount that is not authorized
72-10 under this subchapter, the lender:
72-11 (1) is not entitled to collect an amount for insurance
72-12 or interest on an amount for insurance; and
72-13 (2) shall refund to the borrower or credit to the
72-14 borrower's account all amounts collected for insurance and interest
72-15 collected on those amounts.
72-16 (b) An overcharge that results from an accidental or bona
72-17 fide error may be corrected as provided by Article 8.01.
72-18 (c) The remedy provided by this article is not exclusive of
72-19 any other remedy or penalty provided by this subtitle.
72-20 Art. 3A.716. NONFILING INSURANCE. (a) Instead of charging
72-21 fees for the filing, recording, and releasing of a document
72-22 securing a loan to which Subchapter E applies, an authorized lender
72-23 may include in the loan contract a charge for a nonfiling insurance
72-24 premium.
72-25 (b) The amount of a charge under Subsection (a) may not
72-26 exceed the amount of fees authorized for filing and recording an
72-27 original financing statement in the standard form prescribed by the
73-1 secretary of state.
73-2 (c) A lender may receive an amount authorized under this
73-3 article only if the lender purchases nonfiling insurance in
73-4 connection with the loan contract.
73-5 (d) A lender is not required to furnish to a borrower a
73-6 policy or certificate of insurance evidencing nonfiling insurance.
73-7 SUBCHAPTER J. AUTHORIZED LENDER'S DUTIES AND AUTHORITY
73-8 Art. 3A.801. DELIVERY OF INFORMATION TO BORROWER. (a) When
73-9 a loan is made under this chapter, the lender shall deliver to the
73-10 borrower, or to one borrower if there is more than one, a copy of
73-11 each document signed by the borrower, including the note or loan
73-12 contract, and a written statement in English that contains:
73-13 (1) the names and addresses of the borrower and the
73-14 lender; and
73-15 (2) any type of insurance for which a charge is
73-16 included in the loan contract and the charge to the borrower for
73-17 the insurance.
73-18 (b) If the note or loan contract shows the information
73-19 required by Subsection (a), the written statement is not required.
73-20 Art. 3A.802. RECEIPT FOR CASH PAYMENT. A lender shall give
73-21 a receipt to a person making a cash payment on a loan.
73-22 Art. 3A.803. ACCEPTANCE OF PREPAYMENT. At any time during
73-23 regular business hours, the lender shall accept prepayment of a
73-24 loan in full or, if the amount tendered is less than the amount
73-25 required to prepay the loan in full, prepayment of an amount equal
73-26 to one or more full installments.
73-27 Art. 3A.804. RETURN OF INSTRUMENTS TO BORROWER ON REPAYMENT.
74-1 Within a reasonable time after a loan is repaid in full or an
74-2 open-end account is terminated according to the terms of the
74-3 contract, a lender shall cancel and return to a borrower any
74-4 instrument, including a note, assignment, security agreement, or
74-5 mortgage, or pledged property that:
74-6 (1) secured the loan; and
74-7 (2) does not secure another indebtedness of the
74-8 borrower to the lender.
74-9 Art. 3A.805. AGREEMENT FOR MORE THAN ONE LOAN OR CASH
74-10 ADVANCE. (a) A lender and a borrower may enter an agreement under
74-11 which one or more loans or cash advances are from time to time made
74-12 to or for the account of the borrower.
74-13 (b) An agreement under this article may provide for a
74-14 maximum loan charge on the unpaid principal amounts from time to
74-15 time outstanding at a rate that does not exceed the rate that
74-16 produces the maximum interest charge computed under Article 3A.301
74-17 for an equivalent loan amount.
74-18 (c) An agreement under this article must be written and
74-19 signed by the lender and borrower.
74-20 (d) An agreement under this article must contain:
74-21 (1) the date of the agreement;
74-22 (2) the name and address of each borrower; and
74-23 (3) the name and address of the lender.
74-24 (e) If a charge for insurance coverage is to be included in
74-25 a loan contract, an agreement under this article must clearly set
74-26 forth a simple statement of the amount of the charge or the method
74-27 by which the charge is to be computed.
75-1 (f) The lender shall deliver a copy of an agreement under
75-2 this article to the borrower.
75-3 (g) The commissioner may prescribe monthly rates of charge
75-4 that produce the maximum interest charge computed under Article
75-5 3A.301 for use under Subsection (b) of this article.
75-6 Art. 3A.806. AGREEMENT TO MODIFY TERM OF SECONDARY MORTGAGE
75-7 LOAN CONTRACT. (a) A lender and a borrower may enter into an
75-8 agreement under which a term of a secondary mortgage loan contract
75-9 is amended, restated, or rescheduled.
75-10 (b) An agreement under this article must be written and
75-11 signed by the lender and borrower.
75-12 (c) An agreement under this article must contain:
75-13 (1) the date of the agreement;
75-14 (2) the name and address of the lender; and
75-15 (3) the name and address of each borrower.
75-16 (d) The lender shall deliver a copy of an agreement under
75-17 this article to the borrower.
75-18 SUBCHAPTER K. PROHIBITIONS ON AUTHORIZED LENDER
75-19 Art. 3A.851. OBLIGATION UNDER MORE THAN ONE CONTRACT. (a)
75-20 An authorized lender may not induce or permit a person or a husband
75-21 and wife to be directly or indirectly obligated under more than one
75-22 loan contract at any time for the purpose or with the effect of
75-23 obtaining an amount of interest that is more than the amount of
75-24 interest that is otherwise authorized under this chapter for a loan
75-25 of that aggregate amount with a maximum interest charge computed
75-26 under:
75-27 (1) Article 3A.301(a);
76-1 (2) Article 3A.402; or
76-2 (3) both Articles 3A.301(a) and 3A.402.
76-3 (b) Subsection (a) does not prohibit the purchase of a bona
76-4 fide retail installment contract or revolving charge agreement of a
76-5 borrower for the purchase of goods or services.
76-6 (c) A lender who purchases all or substantially all of the
76-7 loan contracts of another authorized lender and who at the time of
76-8 purchase has a loan contract with a borrower whose loan contract is
76-9 purchased may collect principal and authorized charges according to
76-10 the terms of each loan contract.
76-11 Art. 3A.852. AMOUNT AUTHORIZED. (a) A lender may not
76-12 directly or indirectly charge, contract for, or receive an amount
76-13 that is not authorized under this chapter in connection with a loan
76-14 to which this chapter applies. This includes, but is not limited
76-15 to, any fees, compensation, bonuses, commissions, brokerage,
76-16 discounts, expenses and every other charge of any nature
76-17 whatsoever, whether of the types listed herein or not.
76-18 (b) On a loan subject to Subchapter E or a secondary
76-19 mortgage loan subject to Subchapter G a lender may assess and
76-20 collect from the borrower an amount incurred by the lender for:
76-21 (1) court costs;
76-22 (2) attorney's fees assessed by a court;
76-23 (3) a fee authorized by law for filing, recording, or
76-24 releasing in a public office a security for a loan;
76-25 (4) a reasonable amount spent for repossessing,
76-26 storing, preparing for sale, or selling any security;
76-27 (5) a fee for recording a lien on or transferring a
77-1 certificate of title to a motor vehicle offered as security for a
77-2 loan made under this chapter; or
77-3 (6) a premium or an identifiable charge received in
77-4 connection with the sale of insurance authorized under this
77-5 chapter.
77-6 Art. 3A.853. SECURITY FOR LOAN. (a) A lender may not take
77-7 as security for a loan made under this chapter an assignment of
77-8 wages.
77-9 (b) A lender may not take as security for a loan made under
77-10 Subchapter E or Subchapter F a lien on real property other than a
77-11 lien created by law on the recording of an abstract of judgment.
77-12 (c) A lender may take as security for a loan made under
77-13 Subchapter E or Subchapter F an assignment of:
77-14 (1) a warrant drawn against a state fund; or
77-15 (2) a claim against a state fund or a state agency.
77-16 Art. 3A.854. CONFESSION OF JUDGMENT; POWER OF ATTORNEY. A
77-17 lender may not take a confession of judgment or a power of attorney
77-18 authorizing the lender or a third person to confess judgment or to
77-19 appear for a borrower in a judicial proceeding.
77-20 Art. 3A.855. DISCLOSURE OF AMOUNT FINANCED AND SCHEDULE OF
77-21 PAYMENTS. A lender may not take a promise to pay or loan
77-22 obligation that does not disclose the amount financed and the
77-23 schedule of payments, except for an open-end account.
77-24 Art. 3A.856. INSTRUMENT WITH BLANK PROHIBITED. A lender may
77-25 not take an instrument in which a blank is left to be filled in
77-26 after the loan is made.
77-27 Art. 3A.857. WAIVER OF BORROWER'S RIGHT PROHIBITED. A
78-1 lender may not take an instrument in which a borrower waives any
78-2 right accruing to the borrower under this chapter.
78-3 Art. 3A.858. MAXIMUM LOAN TERM. A lender may not enter a
78-4 loan contract under Article 3A.301(a) under which the borrower
78-5 agrees to make a scheduled payment of principal more than:
78-6 (1) 37 calendar months after the date on which the
78-7 contract is made, if the contract is for a cash advance of $1,500
78-8 or less;
78-9 (2) 49 calendar months after the date on which the
78-10 contract is made, if the contract is for a cash advance of more
78-11 than $1,500 but not more than $3,000; or
78-12 (3) 60 months after the date on which the contract is
78-13 made, if the contract is for a cash advance of more than $3,000.
78-14 SUBCHAPTER L. ADMINISTRATION OF CHAPTER
78-15 Art. 3A.901. ADOPTION OF RULES. (a) The Finance Commission
78-16 of Texas may adopt rules to enforce this chapter.
78-17 (b) The commissioner shall recommend proposed rules to the
78-18 Finance Commission of Texas.
78-19 (c) A rule shall be entered in a permanent book. The book
78-20 is a public record and shall be kept in the office of the
78-21 commissioner.
78-22 Art. 3A.902. EXAMINATION OF LENDERS; ACCESS TO RECORDS. (a)
78-23 The commissioner or the commissioner's representative shall, at the
78-24 times the commissioner considers necessary:
78-25 (1) examine each place of business of each authorized
78-26 lender; and
78-27 (2) investigate the lender's transactions, including
79-1 loans, and records, including books, accounts, papers, and
79-2 correspondence, to the extent the transactions and records pertain
79-3 to the business regulated under this chapter.
79-4 (b) The lender shall:
79-5 (1) give the commissioner or the commissioner's
79-6 representative free access to the lender's office, place of
79-7 business, files, safes, and vaults; and
79-8 (2) allow the commissioner or the commissioner's
79-9 authorized representative to make a copy of an item that may be
79-10 investigated under Subsection (a)(2).
79-11 (c) During an examination the commissioner or the
79-12 commissioner's representative may administer oaths and examine any
79-13 person under oath on any subject pertinent to a matter that the
79-14 commissioner is authorized or required to consider, investigate, or
79-15 secure information about under this chapter.
79-16 (d) Information obtained under this article is confidential.
79-17 (e) A lender's violation of Subsection (b) is a ground for
79-18 the suspension or revocation of the lender's license.
79-19 Art. 3A.903. GENERAL INVESTIGATION. (a) To discover a
79-20 violation of this chapter or to obtain information required under
79-21 this chapter, the commissioner or the commissioner's representative
79-22 may investigate the records, including books, accounts, papers, and
79-23 correspondence, of a person, including an authorized lender, whom
79-24 the commissioner has reasonable cause to believe is violating this
79-25 chapter regardless of whether the person claims to not be subject
79-26 to this chapter.
79-27 (b) For the purposes of this article, a person who
80-1 advertises, solicits, or otherwise represents that the person is
80-2 willing to make a loan with a cash advance less than or equal to
80-3 the amount computed under Article 2.08 using the reference base
80-4 amount of $2,500 is presumed to be engaged in the business
80-5 described by Article 3A.101.
80-6 Art. 3A.904. CERTIFICATE; CERTIFIED DOCUMENT. On
80-7 application by any person and on payment of any associated cost,
80-8 the commissioner shall furnish under the commissioner's seal and
80-9 signed by the commissioner or an assistant of the commissioner:
80-10 (1) a certificate of good standing; or
80-11 (2) a certified copy of a license, rule, or order.
80-12 Art. 3A.905. TRANSCRIPT OF HEARING: PUBLIC. The transcript
80-13 of a hearing held by the commissioner under this chapter is a
80-14 public record.
80-15 Art. 3A.906. APPOINTMENT OF AGENT. (a) An authorized
80-16 lender shall maintain on file with the commissioner a written
80-17 appointment of a resident of this state as the lender's agent for
80-18 service of all judicial or other process or legal notice, unless
80-19 the lender has appointed an agent under another statute of this
80-20 state.
80-21 (b) If an authorized lender does not comply with this
80-22 article, service of all judicial or other process or legal notice
80-23 may be made on the commissioner.
80-24 Art. 3A.907. PAYMENT OF EXAMINATION COSTS AND ADMINISTRATION
80-25 EXPENSES. An authorized lender shall pay to the commissioner an
80-26 amount assessed by the commissioner to cover the direct and
80-27 indirect cost of an examination of the lender under Article 3A.902
81-1 and a proportionate share of general administrative expense.
81-2 Art. 3A.908. AUTHORIZED LENDER'S RECORDS. (a) An
81-3 authorized lender shall maintain records of each loan made under
81-4 this chapter as is necessary to enable the commissioner to
81-5 determine whether the lender is complying with this chapter.
81-6 (b) An authorized lender shall keep the record, make it
81-7 available in this state, or, if the lender makes, transacts, or
81-8 negotiates loans principally by mail, keep the records or make them
81-9 available at the lender's principal place of business, until the
81-10 later of:
81-11 (1) the fourth anniversary of the date of the loan; or
81-12 (2) the second anniversary of the date on which the
81-13 final entry is made in the record.
81-14 (c) The records described by Subsection (a) must be prepared
81-15 in accordance with accepted accounting practices.
81-16 (d) The commissioner shall accept a lender's system of
81-17 records if the system discloses the information reasonably required
81-18 under Subsection (a).
81-19 (e) An authorized lender shall keep all obligations signed
81-20 by borrowers at an office in this state designated by the lender
81-21 unless an obligation is transferred under an agreement that gives
81-22 the commissioner access to the obligation.
81-23 Art. 3A.909. ANNUAL REPORT. (a) Each year, not later than
81-24 May 1, or a subsequent date set by the commissioner, an authorized
81-25 lender shall file with the commissioner a report that contains
81-26 relevant information required by the commissioner concerning the
81-27 business and operations during the preceding calendar year for each
82-1 office of the lender in this state where business is conducted
82-2 under this chapter.
82-3 (b) A report under this article must be:
82-4 (1) under oath; and
82-5 (2) in the form prescribed by the commissioner.
82-6 (c) A report under this article is confidential.
82-7 (d) Annually the commissioner shall prepare and publish a
82-8 consolidated analysis and recapitulation of reports filed under
82-9 this article.
82-10 Art. 3A.910. CONDUCTING ASSOCIATED BUSINESS. An authorized
82-11 lender may conduct business under this chapter in an office, office
82-12 suite, room, or place of business in which any other business is
82-13 conducted or in combination with any other business unless the
82-14 commissioner:
82-15 (1) after a hearing, finds that the lender's
82-16 conducting of the other business in that office, office suite,
82-17 room, or place of business has concealed evasions of this chapter;
82-18 and
82-19 (2) orders the lender in writing to desist from that
82-20 conduct in that office, office suite, room, or place of business.
82-21 SECTION 3. Article 2.02A(1), Title 79, Revised Statutes
82-22 (Article 5069-2.02A, Vernon's Texas Civil Statutes), is amended to
82-23 read as follows:
82-24 (1) The Consumer Credit Commissioner shall enforce Chapters
82-25 2, 3A, [3, 4, 5,] 6, 6A, 7, 8, 9, and 15 of this title and the
82-26 Texas Pawnshop Act (Article 5069-51.01 et seq., Vernon's Texas
82-27 Civil Statutes) in person or through assistant commissioners or any
83-1 examiner or employee.
83-2 SECTION 4. Article 2.03(1), Title 79, Revised Statutes
83-3 (Article 5069-2.03, Vernon's Texas Civil Statutes), is amended to
83-4 read as follows:
83-5 (1) The investigative and enforcement authority under this
83-6 Article applies only to Chapters 2, 3A, [3, 4, 5,] 6, 6A, 7, 8, 9,
83-7 and 15 of this title and the Texas Pawnshop Act (Article 5069-51.01
83-8 et seq., Vernon's Texas Civil Statutes). Upon receipt of written
83-9 complaint or other reasonable cause to believe that any provision
83-10 of those statutes are being violated by any person, the Consumer
83-11 Credit Commissioner may request such person to furnish information
83-12 in regard to a specific loan or retail transaction or business
83-13 practice alleged to be in violation of those statutes.
83-14 SECTION 5. Article 2.03A(l), Title 79, Revised Statutes
83-15 (Article 5069-2.03A, Vernon's Texas Civil Statutes), is amended to
83-16 read as follows:
83-17 (l) When the judgment of the court becomes final, the court
83-18 shall proceed under this subsection. If the person paid the amount
83-19 of the penalty and if that amount is reduced or is not upheld by
83-20 the court, the court shall order that the appropriate amount plus
83-21 accrued interest be remitted to the person. The rate of the
83-22 interest is the rate authorized by Chapter 1E [Article 1.05] of
83-23 this title, and the interest shall be paid for the period beginning
83-24 on the date the penalty was paid and ending on the date the penalty
83-25 is remitted.
83-26 SECTION 6. Article 2.07, Title 79, Revised Statutes (Article
83-27 5069-2.07, Vernon's Texas Civil Statutes), is amended to read as
84-1 follows:
84-2 Art. 2.07. CREDIT AND LOANS TO INDIVIDUALS. No authorized
84-3 lender under Chapter 3A [Chapter 3] of this Title or other person
84-4 involved in transactions subject to this Title may deny an
84-5 individual who has the capacity to contract credit or loans in his
84-6 or her name, or restrict or limit the credit or loan granted on the
84-7 basis of sex, race, color, religion, national origin, marital
84-8 status, or age or because all or part of the individual's income
84-9 derives from a public assistance program in the form of social
84-10 security or supplemental security income, or the individual has in
84-11 good faith exercised any right under the Consumer Credit Protection
84-12 Act (15 U.S.C. Section 1601 et seq.; 18 U.S.C. Section 891 et
84-13 seq.). In interpreting this section, the courts and administrative
84-14 agencies shall be guided by the federal Equal Credit Opportunity
84-15 Act and regulations thereunder and interpretations thereof by the
84-16 Federal Reserve Board to the extent that that Act and those
84-17 regulations and interpretations pertain to conduct prohibited by
84-18 this section.
84-19 SECTION 7. Article 2.08(1), Title 79, Revised Statutes
84-20 (Article 5069-2.08, Vernon's Texas Civil Statutes), is amended to
84-21 read as follows:
84-22 (1) The dollar amount of the ceilings on the cash advance,
84-23 and the brackets establishing ranges of cash advances or balances
84-24 to which certain rates of charges apply in this Title, except the
84-25 brackets in Articles 3A.401, 3A.402, and 3A.858 [Section (1),
84-26 Article 3.16; Section (2), Article 3.16; Article 3.21]; Section
84-27 (9)(e), Article 6.02; Section (12)(a), Article 6.02; and Article
85-1 15.02, are changed as of the effective date of this Act and shall
85-2 be, subject to Subsections (a) and (b), Section (2) of this
85-3 Article, changed from time to time in accordance with the changes
85-4 in the Consumer Price Index for Urban Wage Earners and Clerical
85-5 Workers: U.S. City Average, All Items, 1967=100, compiled by the
85-6 Bureau of Labor Statistics, United States Department of Labor, and
85-7 referred to in this Article as the Index. The Index for December
85-8 1967 is the Reference Base Index period for the purpose of
85-9 determining the adjustment to be made in the rate brackets and
85-10 ceilings.
85-11 SECTION 8. Article 6.01(q), Title 79, Revised Statutes
85-12 (Article 5069-6.01, Vernon's Texas Civil Statutes), is amended to
85-13 read as follows:
85-14 (q) "Credit card issuer" means a person who issues a
85-15 card, plate, or other identification device used to obtain goods or
85-16 services under a retail credit card arrangement. The term does not
85-17 include any person who honors the credit card but did not issue it,
85-18 nor any bank, savings and loan association, credit union, person
85-19 licensed to do business under the provisions of Chapter 3A [3 or 4]
85-20 of this Subtitle, nor any other person who is regularly and
85-21 principally engaged in the business of lending money to persons for
85-22 personal, family, and household purposes.
85-23 SECTION 9. Article 6.02(15), Title 79, Revised Statutes
85-24 (Article 5069-6.02, Vernon's Texas Civil Statutes), is amended to
85-25 read as follows:
85-26 (15) The dollar amount of the rate brackets prescribed by
85-27 Section (9)(a) of this Article are subject to adjustment from time
86-1 to time under Article 2.08 of this Title. As an alternative to the
86-2 rates and amounts of time price differential provided by Section
86-3 (9)(a) of this Article, the parties may agree to any rate or amount
86-4 of time price differential not exceeding a rate or amount
86-5 authorized by Chapter 1D [Article 1.04] of this Title.
86-6 SECTION 10. Article 6.03(5), Title 79, Revised Statutes
86-7 (Article 5069-6.03, Vernon's Texas Civil Statutes), is amended to
86-8 read as follows:
86-9 (5) The dollar amount of the rate brackets in this Article
86-10 is subject to adjustment from time to time under Article 2.08 of
86-11 this Title. As an alternative to the rates or amounts of time
86-12 price differential provided by Section (3) of this Article, the
86-13 parties may agree to any rate or amount of time price differential
86-14 not exceeding a rate or amount authorized by Chapter 1D [Article
86-15 1.04] of this Title or to the rate or amount of the market
86-16 competitive rate ceiling published by the Consumer Credit
86-17 Commissioner as provided in Section (6) of this Article. The
86-18 provisions of Chapter 1D [Article 1.04] of this Title applicable to
86-19 open-end accounts apply to this Article.
86-20 SECTION 11. Articles 6.03(6)(a) and (e), Title 79, Revised
86-21 Statutes (Article 5069-6.03, Vernon's Texas Civil Statutes), are
86-22 amended to read as follows:
86-23 (a) The Consumer Credit Commissioner shall cause to be
86-24 published in the Texas Register, in its first publication following
86-25 September 1 of each year, the market competitive rate ceiling.
86-26 This ceiling shall be effective on the following October 1 for a
86-27 period of one year. The ceiling shall be based on an annual
87-1 percentage rate, whether it is deemed to be interest, time price
87-2 differential, or other similar charge permitted by the laws of any
87-3 state, imposed on a person residing in Texas by a creditor in any
87-4 other state extending credit by the use of a retail charge
87-5 agreement or a credit card. The rate of time price differential
87-6 for the market competitive rate ceiling shall not exceed the
87-7 ceiling in Article 1D.009(d) [Section (c) of Article 1.11] of this
87-8 Title or be below the minimum ceiling in Article 1D.009(a) [Section
87-9 (b)(1) of Article 1.04] of this Title.
87-10 (e) A retail charge agreement of the parties providing
87-11 for a computation under this Article or Chapter 1D [Article 1.04]
87-12 of this Title may be amended pursuant to Article 1D.103 [Section
87-13 (i) of Article 1.04] of this Title to implement the market
87-14 competitive rate ceiling or change a rate or amount. Any holder
87-15 electing to implement the market competitive rate ceiling as to an
87-16 account existing on the effective date of this Act must allow the
87-17 obligor to pay the balance then existing at the rate previously
87-18 agreed to and at the minimum payment terms previously agreed to.
87-19 For this purpose, payments on an account may be applied by the
87-20 holder to the balance existing on the account on the effective date
87-21 of this Act prior to applying them to credit extended after the
87-22 effective date of this Act. The ceiling under this Section may be
87-23 implemented at any time and shall remain in effect until an
87-24 alternative ceiling is implemented. An alternative ceiling may be
87-25 implemented only at the end of a ceiling year as set out in
87-26 Subsection (a) of this Section.
87-27 SECTION 12. Article 6.05, Title 79, Revised Statutes
88-1 (Article 5069-6.05, Vernon's Texas Civil Statutes), is amended to
88-2 read as follows:
88-3 Art. 6.05. PROHIBITED PROVISIONS. No retail installment
88-4 contract or retail charge agreement shall:
88-5 (1) Provide that the holder may accelerate the
88-6 maturity of any part or all of the amount owing thereunder unless
88-7 (a) the buyer is in default in the performance of any of his
88-8 obligations, or (b) the holder in good faith believes that the
88-9 prospect of payment or performance is impaired;
88-10 (2) Contain a power of attorney to confess judgment,
88-11 or an assignment of wages;
88-12 (3) Authorize the seller or holder or other person
88-13 acting on his behalf to enter upon the buyer's premises unlawfully
88-14 or to commit any breach of the peace in the repossession of goods;
88-15 (4) Provide for a waiver of the buyer's rights of
88-16 action against the seller or holder or other person acting therefor
88-17 for any illegal act committed in the collection of payments under
88-18 the contract or agreement or in the repossession of goods;
88-19 (5) Contain any provision by which the buyer executes
88-20 a power of attorney appointing the seller or holder or other person
88-21 acting on his behalf, as the buyer's agent in the repossession of
88-22 goods;
88-23 (6) Provide that the buyer agrees not to assert
88-24 against the seller any claim or defense arising out of the sale;
88-25 (7) Provide for or grant a first lien upon real estate
88-26 to secure such obligation, except, (a) such lien as is created by
88-27 law upon the recording of an abstract of judgment or (b) such lien
89-1 as is provided for or granted by a contract or series of contracts
89-2 for the sale or construction and sale of a structure to be used as
89-3 a residence so long as the time price differential does not exceed
89-4 an annual percentage rate permitted under either this Chapter or
89-5 Chapter 1D [Article 1.04] of this Title.
89-6 SECTION 13. Article 6.12, Title 79, Revised Statutes
89-7 (Article 5069-6.12, Vernon's Texas Civil Statutes), is amended to
89-8 read as follows:
89-9 Art. 6.12. Rates for prepaid funeral benefits regulated by
89-10 Article 548b, Vernon's Texas Civil Statutes. Prepaid funeral
89-11 benefits regulated by Article 548b, Vernon's Texas Civil Statutes,
89-12 may be financed only at rates authorized by Chapter 1D [Article
89-13 1.04] of this title.
89-14 SECTION 14. Article 6.13, Title 79, Revised Statutes
89-15 (Article 5069-6.13, Vernon's Texas Civil Statutes), is amended to
89-16 read as follows:
89-17 Art. 6.13. Rates for medical and dental services. Medical
89-18 or dental services may be financed only at rates authorized by
89-19 Chapter 1D [Article 1.04] of this title.
89-20 SECTION 15. Article 6A.03(7), Title 79, Revised Statutes
89-21 (Article 5069-6A.03, Vernon's Texas Civil Statutes), is amended to
89-22 read as follows:
89-23 (7) As an alternative to the rates and amounts of time price
89-24 differential that may be charged under this section, the parties
89-25 may agree to any rate or amount of time price differential not
89-26 exceeding a rate or amount authorized by Chapter 1D [Article 1.04]
89-27 of this title.
90-1 SECTION 16. Article 6A.16(b)(1), Title 79, Revised Statutes
90-2 (Article 5069-6A.16, Vernon's Texas Civil Statutes), is amended to
90-3 read as follows:
90-4 (1) Each creditor governed by this chapter who is not
90-5 a credit union or an authorized lender under Chapter 3A [3] of this
90-6 title shall register with the Office of Consumer Credit
90-7 Commissioner. Each creditor shall pay an annual fee of $15 for
90-8 each location at which credit transactions subject to this chapter
90-9 are originated, serviced, or collected. The commissioner by rule
90-10 may establish procedures to facilitate the registration and
90-11 collection of fees, including rules staggering the due dates of the
90-12 fees throughout the year. If a creditor fails to renew the
90-13 creditor's registration, the commissioner shall, not later than 30
90-14 days after the expiration of the registration, notify the creditor
90-15 of the expiration, and of the procedures applicable to renewal. A
90-16 registration renewal is timely if filed with the commissioner,
90-17 together with the annual registration fee, not later than 30 days
90-18 after receipt of notice of expiration. A creditor who fails to
90-19 renew timely as required by this section is subject to the
90-20 penalties set forth in Section (2) of this Article.
90-21 SECTION 17. Article 7.03(7), Title 79, Revised Statutes
90-22 (Article 5069-7.03, Vernon's Texas Civil Statutes), is amended to
90-23 read as follows:
90-24 (7) As an alternative to the time price differential
90-25 authorized by Section (1) of this Article, the parties may agree to
90-26 any rate or amount of time price differential not exceeding a rate
90-27 or amount authorized by Chapter 1D [Article 1.04] of this Title.
91-1 SECTION 18. Article 7.11(1), Title 79, Revised Statutes
91-2 (Article 5069-7.11, Vernon's Texas Civil Statutes), is amended to
91-3 read as follows:
91-4 (1) Each holder governed by this chapter who is not a credit
91-5 union or an authorized lender under Chapter 3A [3] of this title
91-6 shall register with the Office of Consumer Credit Commissioner.
91-7 Each holder shall pay an annual fee of $25 for each location at
91-8 which credit transactions subject to this chapter are originated,
91-9 serviced, or collected. The commissioner by rule may establish
91-10 procedures to facilitate the registration and collection of fees,
91-11 including rules staggering the due dates of the fees throughout the
91-12 year. If a holder or seller fails to renew the holder's or
91-13 seller's registration, the commissioner shall, not later than 30
91-14 days after the expiration of the registration, notify the holder or
91-15 seller of the expiration, and of the procedures applicable to
91-16 renewal. A registration renewal is timely if filed with the
91-17 commissioner, together with the annual registration fee, not later
91-18 than 30 days after receipt of notice of expiration. A holder or
91-19 seller who fails to renew timely as required by this section is
91-20 subject to the penalties set forth in Section (2) of this Article.
91-21 SECTION 19. Article 8.01(i), Title 79, Revised Statutes
91-22 (Article 5069-8.01, Vernon's Texas Civil Statutes), is amended to
91-23 read as follows:
91-24 (i) Any person who has or obtains a registration or license
91-25 required by this Title, which registration or license was obtained
91-26 at any time after the date on which the registration or license was
91-27 required, may pay to the Consumer Credit Commissioner all
92-1 registration or license fees that should have been paid pursuant to
92-2 this Title for any and all prior years, plus a late filing fee
92-3 pursuant to this section. In the case of a person who has or
92-4 obtains a registration, the late filing fee shall be $250 except
92-5 that, if the person renews a registration within 30 days after the
92-6 due date, there shall be no penalty. If a person pays the required
92-7 registration fees for the prior periods and the late filing fee,
92-8 the person shall be deemed for all purposes to have had the
92-9 required registration for the periods for which the registration
92-10 fees have been paid. In the case of a person who has or obtains a
92-11 license, the late filing fee shall be $10,000 except that if the
92-12 person previously had a license and the prior license was in good
92-13 standing at the time of its expiration, and the person renews such
92-14 license within 180 days of its expiration, the late filing fee
92-15 shall be $1,000. If a person renews an expired license by payment
92-16 of the license and late filing fees, the person shall be deemed for
92-17 all purposes to have held the required license as if it had not
92-18 expired. If a person has or obtains a license and pays the
92-19 required license fees for prior periods and the late filing fee,
92-20 the person shall be deemed for all purposes to have had the
92-21 required license for such periods but only as to loans as to which
92-22 the person has not contracted for, charged, or received interest in
92-23 excess of that which would be allowed under Chapter 1D [Article
92-24 1.04(a) as modified by Article 1.04(b)] of this Title. A person
92-25 who is deemed to have had a registration or license pursuant to
92-26 this section shall not be subject to any liability, forfeiture, or
92-27 penalty under this Title or other law, other than as set forth in
93-1 this section, resulting from or relating to the fact that the
93-2 person did not have the registration or license at or during the
93-3 earlier periods for which the required registration or license fees
93-4 and late filing fee, as provided in this section, have since been
93-5 paid. The acquisition of the registration or license and payment
93-6 of the filing fees and late filing fee by a person shall also inure
93-7 to the benefit of that person's employees, agents, employers,
93-8 representatives, predecessors, successors, and assigns but not to
93-9 the benefit of any other person who should have been licensed under
93-10 this Title.
93-11 SECTION 20. Article 8.03, Title 79, Revised Statutes
93-12 (Article 5069-8.03, Vernon's Texas Civil Statutes), is amended to
93-13 read as follows:
93-14 Art. 8.03. In addition to the foregoing penalties, if
93-15 applicable, any person engaging in any business under the scope of
93-16 Chapter 3A [Chapter 3, 4, 5,] or 15 of this Title without first
93-17 securing a license provided, or without the authorization
93-18 prescribed, in such Chapter shall be guilty of a misdemeanor and
93-19 upon conviction thereof shall be punishable by a fine of not more
93-20 than One Thousand Dollars, and each such loan made without the
93-21 authority granted by such license shall constitute a separate
93-22 offense punishable hereunder; and in addition such person shall
93-23 forfeit all principal and charges contracted for or collected on
93-24 each such loan, and shall pay reasonable attorneys' fees incurred
93-25 by the obligor.
93-26 SECTION 21. Article 15.01(i), Title 79, Revised Statutes
93-27 (Article 5069-15.01, Vernon's Texas Civil Statutes), is amended to
94-1 read as follows:
94-2 (i) "Licensee" means the holder of a license issued
94-3 pursuant to Chapter 3A [3 of Subtitle 2] of this Title 79.
94-4 SECTION 22. Articles 15.02(d) and (e), Title 79, Revised
94-5 Statutes (Article 5069-15.02, Vernon's Texas Civil Statutes), are
94-6 amended to read as follows:
94-7 (d) Notwithstanding Chapter 1D [Article 1.04] of this Title
94-8 or any other provision of law, on any open-end account authorized
94-9 under Article 3A.805 [3.15(4), 4.01(4)], 15.01(k), or 15.01(l) of
94-10 this Title, pursuant to which credit card transactions [as defined
94-11 in Article 1.01(g) of this Title] may be made or in connection with
94-12 which account a merchant discount [as defined in Article 1.01(h) of
94-13 this Title] is imposed or received by the creditor, the rate of
94-14 interest from time to time in effect on such account is subject to
94-15 and may not exceed the quarterly ceiling from time to time in
94-16 effect as computed pursuant to Chapter 1D [Article 1.04] of this
94-17 Title and as further limited by this section, and the ceiling on
94-18 such account is subject to quarterly adjustment, which adjustment
94-19 shall be made at the option of the creditor either on the quarterly
94-20 calendar dates set out in Article 1D.008 [1.04(d)] of this Title or
94-21 on the first day of the first billing cycle of an account
94-22 immediately following said quarterly calendar dates. If a
94-23 computation of the quarterly ceiling under Chapter 1D [Article
94-24 1.04(a)(2)] of this Title is more than 22 percent per annum, the
94-25 ceiling under this provision shall be 22 percent per annum. If the
94-26 computation of the quarterly ceiling under Chapter 1D [Article
94-27 1.04(a)(2)] of this Title is less than 14 percent per annum, the
95-1 ceiling under this provision shall be 14 percent per annum.
95-2 Notwithstanding any other provision of this Title, a creditor
95-3 charging a rate limited by this section shall not be required to
95-4 disclose any decreases which may from time to time occur in the
95-5 rate on its account.
95-6 (e) Except as provided in Section (d) of this Article, as an
95-7 alternative to the rates authorized by Section (a) of this Article,
95-8 the parties may agree to any rate not exceeding a rate authorized
95-9 by Chapter 1D [Article 1.04] of this Title.
95-10 SECTION 23. Article 15.07, Title 79, Revised Statutes
95-11 (Article 5069-15.07, Vernon's Texas Civil Statutes), is amended to
95-12 read as follows:
95-13 Art. 15.07. COLLATERAL AND INSURANCE. Creditors may require
95-14 and take in connection with an account only such insurance and
95-15 collateral as are allowed under Chapter 3A [4 of Subtitle 2] of
95-16 this Title 79.
95-17 SECTION 24. Article 24.03(g), Insurance Code, is amended to
95-18 read as follows:
95-19 (g) Any person holding a license under Chapter 3A [3], Title
95-20 79, Revised [Civil] Statutes [of Texas, 1925, as amended (Article
95-21 5069-3.01 et seq., Vernon's Texas Civil Statutes)], on the
95-22 effective date of this chapter is required only to pay the license
95-23 fee required under this article and is not required to pay the
95-24 investigation fee required by Section (a) of this article.
95-25 SECTION 25. Article 24.11(h), Insurance Code, is amended to
95-26 read as follows:
95-27 (h) Those additions may be accomplished by a memorandum of
96-1 agreement between the agent and the insured, if before the first
96-2 scheduled payment date of the amended transaction the premium
96-3 finance company gives to the insured the following information in
96-4 writing:
96-5 (1) the amount of the premium increase;
96-6 (2) the down payment on increase;
96-7 (3) the principal amount of increase;
96-8 (4) the total amount of finance charge on increase;
96-9 (5) the total of additional balance due;
96-10 (6) the outstanding balance of original agreement;
96-11 (7) the consolidated agreement balance;
96-12 (8) the annual percentage rate of finance charge on
96-13 additional balance due;
96-14 (9) the revised schedule of payments;
96-15 (10) the amount or method of computing the amount of
96-16 any default, deferment, or similar charges authorized in Chapter 3A
96-17 [3], Title 79, Revised [Civil] Statutes [of Texas, 1925, as amended
96-18 (Article 5069-3.01 et seq., Vernon's Texas Civil Statutes)],
96-19 payable in the event of late payments; and
96-20 (11) identification of the method of computing any
96-21 unearned portion of the finance charge in the event of prepayment
96-22 of the obligation.
96-23 SECTION 26. Article 24.15, Insurance Code, is amended to
96-24 read as follows:
96-25 Art. 24.15. SERVICES CHARGES; LIMITATION OF CHARGES;
96-26 COMPUTATION. A premium finance company may not take or receive
96-27 from an insured a greater rate or charge than is provided by
97-1 Chapter 3A [Chapters 3 and 4], Title 79, Revised [Civil] Statutes
97-2 [of Texas, 1925, as amended (Article 5069-3.01 et seq. and Article
97-3 5069-4.01 et seq., Vernon's Texas Civil Statutes)]. Those charges
97-4 begin on the date from which the insurance company requires payment
97-5 of the premium and payment was made to the insurance company for
97-6 the financed policy or on the effective date of the policy,
97-7 whichever is earlier. The finance charge shall be computed on the
97-8 balance of the premiums due after subtracting the down payment made
97-9 by the insured in accordance with the premium finance agreement.
97-10 On insurance premium finance agreements made under this chapter, no
97-11 insurance charges or any other charge or fee, except those
97-12 authorized by this chapter, are permitted.
97-13 SECTION 27. Article 24.16, Insurance Code, is amended to
97-14 read as follows:
97-15 Art. 24.16. PREPAYMENT; REFUND. Notwithstanding the
97-16 provisions of any premium finance agreement to the contrary, any
97-17 insured may pay it in full at any time before the maturity of the
97-18 final installment of the balance of the agreement, and if the
97-19 insured does so and the agreement included an amount for a charge,
97-20 the insured shall receive for the prepayment either by cash or by
97-21 renewal a refund credit in accordance with the provisions for
97-22 refunds contained in Subchapter H, Chapter 3A [Section (6), Article
97-23 3.15], Title 79, Revised [Civil] Statutes [of Texas, 1925, as
97-24 amended (Article 5069-3.15, Vernon's Texas Civil Statutes)], and
97-25 the regulations issued under that article. Where the amount of the
97-26 credit for anticipation of payments is less than $1, no refund need
97-27 be made.
98-1 SECTION 28. Article 24.17(a), Insurance Code, is amended to
98-2 read as follows:
98-3 (a) A premium finance agreement may provide for the payment
98-4 of a default charge by the insured as provided in Article 3A.303
98-5 [Section (5), Article 3.15], Title 79, Revised [Civil] Statutes [of
98-6 Texas, 1925, as amended (Article 5069-3.15, Vernon's Texas Civil
98-7 Statutes)], the Insurance Code, and the regulations issued under
98-8 those statutes.
98-9 SECTION 29. Article 24.20, Insurance Code, is amended to
98-10 read as follows:
98-11 Art. 24.20. AUTHORITY OF LICENSED LOCAL RECORDING AGENTS TO
98-12 CHARGE INTEREST TO CERTAIN PURCHASERS OF INSURANCE.
98-13 Notwithstanding any other provision of law, any person,
98-14 partnership, or corporation duly licensed as a local recording
98-15 agent under Article 21.14, Insurance Code, as amended, may enter
98-16 into or establish a written agreement with any purchaser of
98-17 insurance from the agent providing for the payment of interest to
98-18 the agent in an amount not to exceed the greater of a rate allowed
98-19 by Chapter 1D [Article 1.04], Title 79, Revised Statutes [(Article
98-20 5069-1.04, Vernon's Texas Civil Statutes)], or the rate of one
98-21 percent a month, on any amount due and owing to the agent for
98-22 insurance purchased by the purchaser. In those instances the claim
98-23 or defense of usury is prohibited.
98-24 SECTION 30. Section 26.02(a)(2), Business & Commerce Code,
98-25 is amended to read as follows:
98-26 (2) "Loan agreement" means one or more promises,
98-27 promissory notes, agreements, undertakings, security agreements,
99-1 deeds of trust or other documents, or commitments, or any
99-2 combination of those actions or documents, pursuant to which a
99-3 financial institution loans or delays repayment of or agrees to
99-4 loan or delay repayment of money, goods, or another thing of value
99-5 or to otherwise extend credit or make a financial accommodation.
99-6 The term does not include a promise, promissory note, agreement,
99-7 undertaking, document, or commitment relating to:
99-8 (A) a credit card or charge card; or
99-9 (B) an open-end account, as that term is defined
99-10 by Article 1B.002 [1.01], Title 79, Revised Statutes [(Article
99-11 5069-1.01, Vernon's Texas Civil Statutes)], intended or used
99-12 primarily for personal, family, or household use.
99-13 SECTION 31. Section 242.098(b), Health and Safety Code, is
99-14 amended to read as follows:
99-15 (b) Interest on unreimbursed amounts begins to accrue on the
99-16 date on which the funds were disbursed to the home. The rate of
99-17 interest is the rate determined under Article 1E.003, [Section 2,
99-18 Article 1.05,] Title 79, Revised Statutes [(Article 5069-1.05,
99-19 Vernon's Texas Civil Statutes)], to be applicable to judgments
99-20 rendered during the month in which the money was disbursed to the
99-21 home.
99-22 SECTION 32. Section 143.1215(c), Local Government Code, is
99-23 amended to read as follows:
99-24 (c) Interest under Subsection (b) accrues beginning on the
99-25 date of the fire fighter's or police officer's reinstatement at a
99-26 rate equal to three percent plus the rate for court judgments under
99-27 Chapter 1E [Article 1.05], Title 79, Revised Statutes [(Article
100-1 5069-1.05, Vernon's Texas Civil Statutes)], that is in effect on
100-2 the date of the person's reinstatement.
100-3 SECTION 33. Section 395.025(d), Local Government Code, is
100-4 amended to read as follows:
100-5 (d) Any refund shall bear interest calculated from the date
100-6 of collection to the date of refund at the statutory rate as set
100-7 forth in Article 1C.002 [1.03], Title 79, Revised Statutes
100-8 [(Article 5069-1.03, Vernon's Texas Civil Statutes)], or its
100-9 successor statute.
100-10 SECTION 34. Section 32.35(a)(5), Penal Code, is amended to
100-11 read as follows:
100-12 (5) "Creditor" means a person licensed under Chapter
100-13 3A [3], Subtitle 2, Title 79, Revised Statutes [(Article 5069-3.01
100-14 et seq., Vernon's Texas Civil Statutes)], a bank, savings and loan
100-15 association, credit union, or other regulated financial institution
100-16 that lends money or otherwise extends credit to a cardholder
100-17 through a credit card and that authorizes other persons to honor
100-18 the credit card.
100-19 SECTION 35. Section 32.065(d), Tax Code, is amended to read
100-20 as follows:
100-21 (d) Chapters 3A [5] and 15 and Article 1C.102 [and Sections
100-22 1.07(d)(1) and (f)], Title 79, Revised Statutes [(Article 5069-1.01
100-23 et seq., Vernon's Texas Civil Statutes)], do not apply to a
100-24 transaction covered by this section. The transferee of a tax lien
100-25 under this section is not required to obtain a license under Title
100-26 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
100-27 Civil Statutes).
101-1 SECTION 36. Section 35-1, The Securities Act (Article
101-2 581-35-1, Vernon's Texas Civil Statutes), is amended to read as
101-3 follows:
101-4 Sec. 35-1. FEES FOR SALES OF EXCESS SECURITIES. A. An
101-5 offeror who sells securities in this State in excess of the
101-6 aggregate amount of securities registered for the offering may
101-7 apply to register the excess securities by paying three times the
101-8 difference between the initial fee paid and the fee required under
101-9 Subsection E of Section 35, plus, if the registration is no longer
101-10 in effect, interest on that amount computed at the rate provided by
101-11 Article 1C.002 [1.03], Title 79, Revised Statutes [(Article
101-12 5069-1.03, Vernon's Texas Civil Statutes)], from the date the
101-13 registration was no longer in effect until the date the subsequent
101-14 application is filed, for the securities sold to persons within
101-15 this State, plus the amendment fee prescribed by Subsection D of
101-16 Section 35. Registration of the excess securities, if granted,
101-17 shall be effective retroactively to the effective date of the
101-18 initial registration for the offering.
101-19 B. An offeror who has filed a notice to claim a limited
101-20 offering exemption, who paid less than the maximum fee prescribed
101-21 in Subsection J of Section 35, and who offered a greater amount of
101-22 securities in the offering than authorized pursuant to the formula
101-23 prescribed in Subsection J of Section 35, may file an amended
101-24 notice disclosing the amount of securities offered and paying three
101-25 times the difference between the fee initially paid and the fee
101-26 which should have been paid, plus interest on that amount computed
101-27 at the rate provided by Article 1C.002 [1.03], Title 79, Revised
102-1 Statutes [(Article 5069-1.03, Vernon's Texas Civil Statutes)], from
102-2 the date the original notice was received by the Commissioner until
102-3 the date the amended notice is received by the Commissioner. The
102-4 amended notice shall be retroactive to the date of the initial
102-5 filing.
102-6 SECTION 37. Section 35-2, The Securities Act (Article
102-7 581-35-2, Vernon's Texas Civil Statutes), is amended to read as
102-8 follows:
102-9 Sec. 35-2. FEES FOR SALES OF UNREGISTERED SECURITIES. If,
102-10 after notice and hearing, the commissioner or any court of
102-11 competent jurisdiction finds that an offeror has sold securities in
102-12 this State pursuant to an offering no part of which has been
102-13 registered under Section 7 or 10 of this Act and for which the
102-14 transactions or securities are not exempt under Section 5 or 6 of
102-15 this Act, the commissioner or said court may impose a fee equal to
102-16 six times the amount that would have been paid if the issuer had
102-17 filed an application to register the securities and paid the fee
102-18 prescribed by Subsection E of Section 35 based on the aggregate
102-19 amount of sales made in this State within the prior three years,
102-20 plus interest on that amount at the rate provided by Article 1C.002
102-21 [1.03], Title 79, Revised Statutes [(Article 5069-1.03, Vernon's
102-22 Texas Civil Statutes)], from the date of the first such sale made
102-23 in this State until the date the fee is paid. The payment of the
102-24 fee prescribed by this Section does not effect registration of the
102-25 securities or affect the application of any other Section of this
102-26 Act. The payment of the fee prescribed by this Section is not an
102-27 admission that the transactions or securities were not exempt and
103-1 is not admissible as evidence in a suit or proceeding for failure
103-2 to register the securities.
103-3 SECTION 38. Article 2.09A, Texas Miscellaneous Corporation
103-4 Laws Act (Article 1302-2.09A, Vernon's Texas Civil Statutes), is
103-5 amended to read as follows:
103-6 Art. 2.09A. ALTERNATIVE RATE. Notwithstanding the
103-7 provisions of Article 2.09 of this Act, any corporation, domestic
103-8 or foreign, including but not limited to any charitable or
103-9 religious corporation, may agree to and stipulate for any rate of
103-10 interest that does not exceed a rate authorized by Chapter 1D
103-11 [Article 1.04], Title 79, Revised [Civil] Statutes [of Texas, 1925,
103-12 as amended (Article 5069-1.04, Vernon's Texas Civil Statutes)].
103-13 SECTION 39. Section 7.01, Texas Credit Union Act (Article
103-14 2461-7.01, Vernon's Texas Civil Statutes), is amended to read as
103-15 follows:
103-16 Sec. 7.01. PURPOSE, TERMS, AND INTEREST RATE. If made in
103-17 accordance with rules adopted by the commission, a credit union may
103-18 make loans to members for such purposes as it may approve and on
103-19 such security and terms as it may require, at rates of interest not
103-20 exceeding one and one-half percent per month on the unpaid balance,
103-21 or higher rates otherwise authorized by law, including the rates
103-22 authorized by Chapter 1D [Article 1.04], Title 79, Revised Statutes
103-23 [(Article 5069-1.04, Vernon's Texas Civil Statutes)]. Chapter 15
103-24 and Subtitle 2, Title 79, Revised Statutes [(Article 5069-2.01 et
103-25 seq., Vernon's Texas Civil Statutes)], do not apply to a credit
103-26 union loan or extension of credit unless the agreement evidencing
103-27 that transaction specifically provides otherwise. Every loan must
104-1 be evidenced by a written instrument.
104-2 SECTION 40. Section 16.01, Medical Liability and Insurance
104-3 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
104-4 Statutes), is amended to read as follows:
104-5 Sec. 16.01. APPLICATION OF OTHER LAW. Notwithstanding
104-6 Articles 1E.101, 1E.102, and 1E.104-1E.108 [Sections 6(a)-(f),
104-7 Article 1.05], Title 79, Revised Statutes [(Article 5069-1.05,
104-8 Vernon's Texas Civil Statutes)], prejudgment interest in a health
104-9 care liability claim shall be awarded in accordance with this
104-10 subchapter.
104-11 SECTION 41. Section 16.02(c), Medical Liability and
104-12 Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas
104-13 Civil Statutes), is amended to read as follows:
104-14 (c) Prejudgment interest allowed under this subchapter shall
104-15 be computed in accordance with Article 1E.103 [Section 6(g),
104-16 Article 1.05], Title 79, Revised Statutes [(Article 5069-1.05,
104-17 Vernon's Texas Civil Statutes)], for a period beginning on the date
104-18 of injury and ending on the date before the date the judgment is
104-19 signed.
104-20 SECTION 42. Section 1.04(c), Texas Revised Partnership Act
104-21 (Article 6132b-1.04, Vernon's Texas Civil Statutes), is amended to
104-22 read as follows:
104-23 (c) Interest Rate. If an obligation to pay interest arises
104-24 under this Act and the rate is not specified, the rate is the rate
104-25 specified by Article 1C.002 [1.03], Title 79, Revised Statutes
104-26 [(Article 5069-1.03, Vernon's Texas Civil Statutes), and its
104-27 subsequent amendments], or a successor statute.
105-1 SECTION 43. Section 1(a), Chapter 617, Acts of the 68th
105-2 Legislature, Regular Session, 1983 (Article 9022, Vernon's Texas
105-3 Civil Statutes), is amended to read as follows:
105-4 (a) The holder of a check or its assignee, agent,
105-5 representative, or any other person retained by the holder to seek
105-6 collection of the face value of the dishonored check on return of
105-7 the check to the holder following its dishonor by a payor may
105-8 charge the drawer or endorser a reasonable processing fee, which
105-9 shall not exceed $25. A person may not charge a processing fee to a
105-10 drawer or endorser under this subsection if the fee has been
105-11 collected under Article 102.007(e) or Article 102.0071, Code of
105-12 Criminal Procedure. If a processing fee has been collected under
105-13 this subsection and the holder subsequently receives a fee
105-14 collected under Article 102.007(e) or Article 102.0071, Code of
105-15 Criminal Procedure, the holder shall immediately refund the fee
105-16 previously collected from the drawer or endorser. Notwithstanding
105-17 any other provisions of law, a loan agreement made under Chapter 3A
105-18 [3 or 4], Title 79, Revised Statutes [(Article 5069-1.01 et seq.,
105-19 Vernon's Texas Civil Statutes)], may provide that on return of a
105-20 dishonored check given in payment under the agreement, the holder
105-21 may charge the obligor under the agreement the processing fee
105-22 authorized by this Act, and the fee may be added to the unpaid
105-23 balance owed under the agreement, except that interest may not be
105-24 charged on the fee during the term of the agreement.
105-25 SECTION 44. Chapters 1, 1A, 3, 4, and 5, Title 79, Revised
105-26 Statutes, are repealed.
105-27 SECTION 45. Title 16, Revised Statutes, is amended by adding
106-1 Article 375 to read as follows:
106-2 Art. 375. LIMITATIONS ON CHARGES ON LOANS REQUIRING ESCROW
106-3 ACCOUNT
106-4 Sec. 1. If an escrow account is required to be maintained
106-5 in connection with a loan secured by a mortgage on residential real
106-6 property, the holder of the mortgage may not charge or collect
106-7 interest on the loan or a penalty relating to the loan for any
106-8 period during which the balance in the escrow account exceeds the
106-9 unpaid principal balance of the loan.
106-10 Sec. 2. A lender who violates Section 1 commits usury and
106-11 is liable to the borrower for an amount equal to the amount
106-12 computed as follows as of the date of the violation:
106-13 (1) three times the amount of the unpaid principal
106-14 balance of the loan; and
106-15 (2) three times the balance of the escrow account.
106-16 Sec. 3. A violation of Section 1 is a deceptive trade
106-17 practice actionable under Subchapter E, Chapter 17, Business &
106-18 Commerce Code.
106-19 SECTION 46. (a) The change in law made by this Act applies
106-20 only to an act committed or a transaction that occurs on or after
106-21 the effective date of this Act.
106-22 (b) An act committed or a transaction that occurs before the
106-23 effective date of this Act is covered by the law in effect when the
106-24 act was committed or the transaction occurred, and the former law
106-25 is continued in effect for that purpose.
106-26 SECTION 47. (a) If this Act conflicts with another Act of
106-27 the 75th Legislature, Regular Session, 1997:
107-1 (1) the change in law made in the other Act prevails
107-2 and the substance of the change is given effect as part of this Act
107-3 unless:
107-4 (A) this Act or the conflicting Act expressly
107-5 provides otherwise; or
107-6 (B) it is not possible to give the conflicting
107-7 law effect within the context of this Act, in which event this Act
107-8 prevails; and
107-9 (2) the text of a law that is reenacted in the other
107-10 Act only because of the constitutional requirement that the amended
107-11 law be reenacted at length is superseded by this Act.
107-12 (b) If this Act and another Act of the 75th Legislature,
107-13 Regular Session, 1997, make the same substantive change from the
107-14 current law, but differ in text, this Act prevails regardless of
107-15 the relative dates of enactment.
107-16 SECTION 48. This Act takes effect September 1, 1997.
107-17 SECTION 49. The importance of this legislation and the
107-18 crowded condition of the calendars in both houses create an
107-19 emergency and an imperative public necessity that the
107-20 constitutional rule requiring bills to be read on three several
107-21 days in each house be suspended, and this rule is hereby suspended.