1-1 By: Marchant (Senate Sponsor - Cain) H.B. No. 1971
1-2 (In the Senate - Received from the House May 1, 1997;
1-3 May 2, 1997, read first time and referred to Committee on Economic
1-4 Development; May 8, 1997, reported adversely, with favorable
1-5 Committee Substitute by the following vote: Yeas 6, Nays 0;
1-6 May 8, 1997, sent to printer.)
1-7 COMMITTEE SUBSTITUTE FOR H.B. No. 1971 By: Cain
1-8 A BILL TO BE ENTITLED
1-9 AN ACT
1-10 relating to usury and the regulation of lenders.
1-11 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-12 SECTION 1. Subtitle 1, Title 79, Revised Statutes, is
1-13 amended by adding Chapters 1B-1H to read as follows:
1-14 CHAPTER 1B. GENERAL PROVISIONS
1-15 Art. 1B.001. SHORT TITLE. This title may be cited as the
1-16 Texas Credit Title.
1-17 Art. 1B.002. DEFINITIONS. (a) In this subtitle:
1-18 (1) "Contract interest" means interest that an obligor
1-19 has paid or agreed to pay to a creditor under a written contract of
1-20 the parties. The term "contract interest" does not include
1-21 judgment interest.
1-22 (2) "Credit card transaction" means a transaction for
1-23 personal, family, or household use in which a credit card, plate,
1-24 coupon book, or credit card cash advance check may be used or is
1-25 used to debit an open-end account in connection with:
1-26 (A) a purchase or lease of goods or services; or
1-27 (B) a loan of money.
1-28 (3) "Creditor" means a person who loans money or
1-29 otherwise extends credit. The term "creditor" does not include a
1-30 judgment creditor.
1-31 (4) "Interest" means compensation for the use,
1-32 forbearance, or detention of money. The term "interest" does not
1-33 include time price differential, regardless of how it is
1-34 denominated.
1-35 (5) "Judgment creditor" means a person to whom a money
1-36 judgment is payable.
1-37 (6) "Judgment debtor" means a person obligated to pay
1-38 a money judgment.
1-39 (7) "Judgment interest" means interest on a money
1-40 judgment, whether the interest accrues before, on, or after the
1-41 date the judgment is rendered.
1-42 (8) "Legal interest" means interest charged or
1-43 received in the absence of any agreement by an obligor to pay
1-44 contract interest. The term "legal interest" does not include
1-45 judgment interest.
1-46 (9) "Lender credit card agreement":
1-47 (A) means an agreement between a creditor and an
1-48 obligor that provides:
1-49 (i) the obligor, by means of a credit card
1-50 transaction for personal, family, or household use, may:
1-51 (a) obtain loans from the
1-52 creditor directly or through other participating persons; and
1-53 (b) lease or purchase goods
1-54 or services from more than one participating lessor or seller who
1-55 honors the creditor's credit card;
1-56 (ii) the creditor or another person acting
1-57 in cooperation with the creditor is to reimburse the participating
1-58 persons, lessors, or sellers for the loans or the goods or
1-59 services purchased or leased;
1-60 (iii) the obligor is to pay the creditor
1-61 the amount of the loan or cost of the lease or purchase;
1-62 (iv) the unpaid balance of the loan,
1-63 lease, or purchase and interest on that unpaid balance are debited
1-64 to the obligor's account under the agreement;
2-1 (v) interest may be computed on the
2-2 balances of the obligor's account but is not precomputed; and
2-3 (vi) the obligor and the creditor may
2-4 agree that payment of part of the balance may be deferred;
2-5 (B) includes an agreement under Article 3A.805,
2-6 15.01(k), or 15.01(l) for an open-end account under which credit
2-7 card transactions may be made or a merchant discount may be taken;
2-8 and
2-9 (C) does not include:
2-10 (i) an agreement, including an open-end
2-11 account credit agreement, between a seller and a buyer or between a
2-12 lessor and a lessee; or
2-13 (ii) an agreement under which:
2-14 (a) the entire balance is
2-15 due in full each month; and
2-16 (b) no interest is charged
2-17 if the obligor pays the entire balance each month.
2-18 (10) "Loan" means an advance of money that is made to
2-19 or on behalf of an obligor, the principal amount of which the
2-20 obligor has an obligation to pay the creditor. The term "loan"
2-21 does not include a judgment.
2-22 (11) "Merchant discount" means the consideration,
2-23 including a fee, charge, discount, or compensating balance, that a
2-24 creditor requires, or that a creditor, subsidiary, or parent
2-25 company of the creditor, or subsidiary of the creditor's parent
2-26 company, receives directly or indirectly from a person other than
2-27 the obligor in connection with a credit card transaction under a
2-28 lender credit card agreement between the obligor and the creditor.
2-29 The term "merchant discount" does not include consideration
2-30 received by a creditor from the obligor in connection with the
2-31 credit card transaction.
2-32 (12) "Money judgment" means a judgment for money
2-33 entered by a court of competent jurisdiction. For purposes of this
2-34 subtitle, the term "money judgment" includes legal interest or
2-35 contract interest, if any, that is payable to a judgment creditor
2-36 under a judgment.
2-37 (13) "Obligor" means a person to whom money is loaned
2-38 or credit is otherwise extended. The term "obligor" does not
2-39 include:
2-40 (A) a judgment debtor; or
2-41 (B) a surety, guarantor, or similar person.
2-42 (14) "Open-end account":
2-43 (A) means an account under a written contract
2-44 between a creditor and an obligor that:
2-45 (i) the creditor reasonably contemplates
2-46 repeated transactions and the obligor is authorized to make
2-47 purchases or borrow money;
2-48 (ii) interest or time price differential
2-49 may be charged from time to time on an outstanding unpaid balance;
2-50 and
2-51 (iii) the amount of credit that may be
2-52 extended during the term of the account is generally made available
2-53 to the extent that any outstanding balance is repaid; and
2-54 (B) includes an account under an agreement
2-55 described by Article 3A.805 or Chapter 6 or 15.
2-56 (15) "Person" means an individual, partnership,
2-57 corporation, joint venture, trust, association, limited liability
2-58 company, or any legal entity however organized.
2-59 (16) "Prepayment penalty" means consideration agreed
2-60 on and contracted for a discharge and release of a loan before its
2-61 maturity or its regularly scheduled date or dates of payment, as a
2-62 result of an election by the obligor to pay all of the principal
2-63 amount before its stated maturity or its regularly scheduled date
2-64 or dates of payment.
2-65 (17) "Time price differential" means an amount,
2-66 however denominated or expressed, that is:
2-67 (A) added to the price at which a seller offers
2-68 to sell services or real or personal property to a purchaser for
2-69 cash payable at the time of sale; and
3-1 (B) paid or payable to the seller by the
3-2 purchaser for the privilege of paying the offered sales price after
3-3 the time of sale.
3-4 (18) "Usury" or "usurious interest" means interest
3-5 that exceeds the applicable maximum amount allowed by law.
3-6 (b) These definitions shall be liberally construed to
3-7 accomplish the purposes of this subtitle.
3-8 (c) The finance commission by rule may adopt other
3-9 definitions to accomplish the purposes of this subtitle.
3-10 CHAPTER 1C. INTEREST RATES
3-11 SUBCHAPTER A. USURY
3-12 Art. 1C.001. USURIOUS RATE OF INTEREST. (a) A creditor may
3-13 contract for, charge, and receive from an obligor interest or time
3-14 price differential.
3-15 (b) The maximum rate or amount of interest is 10 percent a
3-16 year except as otherwise provided by law. A greater rate of
3-17 interest than 10 percent a year unless otherwise provided by law is
3-18 usurious. All contracts for usury are contrary to public policy
3-19 and subject to the appropriate penalty prescribed by Chapter 1F.
3-20 (c) To determine the interest rate of a loan under this
3-21 subtitle, all interest at any time contracted for shall be
3-22 aggregated and amortized using the actuarial method during the
3-23 stated term of the loan.
3-24 Art. 1C.002. ACCRUAL OF INTEREST WHEN NO RATE SPECIFIED. If
3-25 a creditor has not agreed with an obligor to charge the obligor any
3-26 interest, the creditor may charge and receive from the obligor
3-27 legal interest at the rate of six percent a year on the principal
3-28 amount of the credit extended by the creditor to the obligor
3-29 beginning on the 30th day after the date on which the amount is
3-30 due. If an obligor has agreed to pay to a creditor any
3-31 compensation that constitutes interest, the obligor is considered
3-32 to have agreed on the rate produced by the amount of that interest,
3-33 regardless of whether that rate is stated in the agreement.
3-34 SUBCHAPTER B. OTHER RATES AND PROVISIONS
3-35 ON LOANS SECURED BY REAL PROPERTY
3-36 Art. 1C.101. DETERMINING RATES OF INTEREST BY SPREADING.
3-37 (a) To determine whether a loan secured in any part by an interest
3-38 in real property, including a lien, mortgage, or security interest,
3-39 is usurious, the interest rate is computed by amortizing or
3-40 spreading, using the actuarial method during the stated term of the
3-41 loan, all interest at any time contracted for, charged, or received
3-42 in connection with the loan.
3-43 (b) If a loan described in Subsection (a) is paid in full
3-44 before the end of the stated term of the loan and the amount of
3-45 interest received for the period that the loan exists exceeds the
3-46 amount that produces the maximum rate authorized by law for that
3-47 period, the lender shall:
3-48 (1) refund the amount of the excess to the borrower;
3-49 or
3-50 (2) credit the amount of the excess against amounts
3-51 owing under the loan.
3-52 (c) A lender who complies with Subsection (b) is not subject
3-53 to any of the penalties provided by law for contracting for,
3-54 charging, or receiving interest in excess of the maximum rate
3-55 authorized.
3-56 Art. 1C.102. PROHIBITION ON PREPAYMENT CHARGE OR PENALTY.
3-57 If a loan for property that is to be the residential homestead of
3-58 the borrower is made at an interest rate that is greater than a
3-59 rate of 12 percent a year, a prepayment charge or penalty may not
3-60 be collected on the loan unless the charge or penalty is required
3-61 by an agency created by federal law.
3-62 Art. 1C.103. EFFECT OF FEDERAL PREEMPTION ON LATE CHARGES.
3-63 On loans subject to 12 U.S.C. Sections 1735f-7 and 1735f-7a, as
3-64 amended, late charges, if assessed, are interest that is included
3-65 in computing the amount or rate of interest on the loan and,
3-66 therefore, covered by the federal preemption of state interest rate
3-67 limitations.
3-68 CHAPTER 1D. OPTIONAL RATE CEILINGS
3-69 SUBCHAPTER A. RATE CEILINGS: APPLICABILITY, COMPUTATION,
4-1 AND PUBLICATION
4-2 Art. 1D.001. USE OF CEILINGS. (a) Except as provided by
4-3 Subchapter B, a person may contract for, charge, or receive a rate
4-4 or amount that does not exceed the applicable interest rate ceiling
4-5 provided by this chapter. The use of a ceiling provided by this
4-6 chapter for any contract is optional, and a contract may provide
4-7 for a rate or amount allowed by other applicable law.
4-8 (b) A contract, including a contract for an open-end
4-9 account, that is subject to Chapter 3A, 6, 6A, or 7 may, as an
4-10 alternative to an interest rate or amount of time price
4-11 differential allowed under that chapter, provide for a simple or
4-12 precomputed rate or amount of time price differential that does not
4-13 exceed the applicable ceiling provided by this chapter or by the
4-14 equivalent yield authorized by Chapter 3A, 6, 6A, or 7.
4-15 (c) Except as inconsistent with this chapter, a party to a
4-16 contract that is subject to Chapter 3A, 6, 6A, or 7, or the party's
4-17 assignee, has all rights, duties, and obligations under the
4-18 applicable chapter, including those relating to refund credits on
4-19 prepayment or acceleration.
4-20 Art. 1D.002. WEEKLY CEILING. The parties to a written
4-21 agreement may agree to an interest rate, or in an agreement
4-22 described in Chapter 6, 6A, or 7, an amount of time price
4-23 differential producing a rate, that does not exceed the applicable
4-24 weekly ceiling.
4-25 Art. 1D.003. COMPUTATION OF WEEKLY CEILING. (a) The weekly
4-26 ceiling is computed by:
4-27 (1) multiplying the auction rate by two; and
4-28 (2) rounding the result obtained under Subdivision (1)
4-29 to the nearest one-quarter of one percent.
4-30 (b) The weekly rate ceiling becomes effective on Monday of
4-31 each week and remains in effect through the following Sunday.
4-32 (c) In this article, "auction rate" means the auction
4-33 average rate quoted on a bank discount basis for 26-week treasury
4-34 bills issued by the United States government, as published by the
4-35 Federal Reserve Board, for the week preceding the week in which the
4-36 weekly rate ceiling is to take effect.
4-37 Art. 1D.004. MONTHLY CEILING. (a) The monthly ceiling may
4-38 be used as an alternative to the weekly ceiling only for a contract
4-39 that:
4-40 (1) provides for a variable rate, including a contract
4-41 for an open-end account; and
4-42 (2) is not made for personal, family, or household
4-43 use.
4-44 (b) A contract that provides for the use of the monthly
4-45 ceiling may not provide for the use of another rate ceiling
4-46 provided under this subchapter.
4-47 Art. 1D.005. COMPUTATION OF MONTHLY CEILING. (a) The
4-48 consumer credit commissioner shall compute the monthly ceiling on
4-49 the first business day of the calendar month in which the rate
4-50 applies. The monthly ceiling is effective for one month beginning
4-51 on the first calendar day of each month. If the parties agree that
4-52 the rate is subject to being adjusted on a monthly basis, they may
4-53 further contract that the rate from time to time in effect may not
4-54 exceed the monthly ceiling from time to time in effect under this
4-55 article and the monthly ceiling from time to time in effect is the
4-56 ceiling on those contracts.
4-57 (b) The monthly ceiling is computed by averaging all of the
4-58 weekly ceilings computed using rates from auctions held during the
4-59 calendar month preceding the computation date of the monthly
4-60 ceiling.
4-61 Art. 1D.006. QUARTERLY CEILING. (a) A written contract,
4-62 including a contract that involves an open-end account, may, as an
4-63 alternative to the weekly ceiling, provide for an interest rate or
4-64 an amount of time price differential producing a rate that does not
4-65 exceed the applicable quarterly ceiling.
4-66 (b) A variable rate contract authorized under Article 1D.015
4-67 may not provide for use of both the weekly ceiling and the
4-68 quarterly ceiling.
4-69 Art. 1D.007. ANNUALIZED CEILING. The annualized ceiling may
5-1 be used as an alternative to the weekly ceiling only for a written
5-2 contract that involves an open-end account.
5-3 Art. 1D.008. COMPUTATION OF QUARTERLY AND ANNUALIZED
5-4 CEILING. (a) On December 1, March 1, June 1, and September 1 of
5-5 each year, the consumer credit commissioner shall compute the
5-6 quarterly ceiling and annualized ceiling for the calendar quarter
5-7 beginning the following January 1, April 1, July 1, and October 1,
5-8 respectively. The quarterly ceiling becomes effective for
5-9 three-month periods beginning on the four calendar dates set out in
5-10 this subsection and is subject to adjustment after each three-month
5-11 period. The annualized ceiling becomes effective on each of the
5-12 four calendar dates set out in this subsection and remains in
5-13 effect for a period of 12 months, at which time it is subject to
5-14 adjustment.
5-15 (b) The quarterly ceiling and annualized ceiling are
5-16 computed by averaging all of the weekly ceilings computed using
5-17 average auction rates during the three calendar months preceding
5-18 the computation date of the ceiling.
5-19 Art. 1D.009. MAXIMUM AND MINIMUM WEEKLY, MONTHLY, QUARTERLY,
5-20 OR ANNUALIZED CEILING. (a) If the rate computed for the weekly,
5-21 monthly, quarterly, or annualized ceiling is less than 18 percent a
5-22 year, the ceiling is 18 percent a year.
5-23 (b) Except as provided by Subsection (c) or (d), if the rate
5-24 computed for the weekly, monthly, quarterly, or annualized ceiling
5-25 is more than 24 percent a year, the ceiling is 24 percent a year.
5-26 (c) For a contract made, extended, or renewed under which
5-27 credit is extended for a business, commercial, investment, or
5-28 similar purpose and the amount of the credit extension is $250,000
5-29 or more, the 24-percent limitation on the ceilings in Subsection
5-30 (b) does not apply, and the limitation on the ceilings determined
5-31 by those computations is 28 percent a year.
5-32 (d) For an open-end account credit agreement that provides
5-33 for credit card transactions on which a merchant discount is not
5-34 imposed or received by the creditor, if the rate computed for the
5-35 weekly ceiling, monthly ceiling, quarterly ceiling, or annualized
5-36 ceiling is more than 21 percent a year, the ceiling is 21 percent a
5-37 year.
5-38 (e) In this chapter, "weekly ceiling," "monthly ceiling,"
5-39 "quarterly ceiling," or "annualized ceiling" refers to that ceiling
5-40 as determined after the application of this article.
5-41 Art. 1D.010. COMPUTATION OF CEILING IF INFORMATION
5-42 UNAVAILABLE. If any of the information required to compute a rate
5-43 ceiling is discontinued or is no longer available to the consumer
5-44 credit commissioner from the Federal Reserve Board in the time
5-45 required for the computation, the ceiling last computed remains in
5-46 effect until the information becomes available and a new ceiling is
5-47 computed from the obtained information.
5-48 Art. 1D.011. PUBLICATION OF RATE CEILINGS. (a) The
5-49 consumer credit commissioner shall send the rate ceilings computed
5-50 under this subchapter to the secretary of state for publication in
5-51 the Texas Register.
5-52 (b) The monthly, quarterly, or annualized ceiling shall be
5-53 published before the 11th day after the date on which the ceiling
5-54 is computed.
5-55 Art. 1D.012. JUDICIAL NOTICE. A court may take judicial
5-56 notice of interpretations issued by the consumer credit
5-57 commissioner or information published in the Texas Register under
5-58 Article 1D.011.
5-59 Art. 1D.013. DETERMINATION OF CEILING FOR CONTRACT TO RENEW
5-60 OR EXTEND DEBT PAYMENT. The rate ceiling for a contract to renew
5-61 or extend the terms of payment of a debt is the ceiling in effect
5-62 under this chapter when the contract for renewal or extension is
5-63 made, regardless of when the debt is incurred.
5-64 Art. 1D.014. RATE FOR LENDER CREDIT CARD AGREEMENT WITH
5-65 MERCHANT DISCOUNT. On an amount owed for a credit card transaction
5-66 under a lender credit card agreement that imposes or allows the
5-67 creditor to receive a merchant discount, the creditor may not
5-68 contract for, charge, or receive:
5-69 (1) a rate that exceeds the ceiling provided under
6-1 Article 15.02; or
6-2 (2) a fee or charge that:
6-3 (A) is not allowed under Chapter 15; or
6-4 (B) exceeds the amount allowed under Chapter 15.
6-5 Art. 1D.015. VARIABLE RATE. (a) The parties to a contract,
6-6 including a contract for an open-end account, may agree to any
6-7 index, formula, or provision of law by which the interest rate or
6-8 amount of time price differential will be determined, but the
6-9 agreed rate of interest or yield from an amount of time price
6-10 differential may not exceed the amount that would be produced by
6-11 the rate ceiling applicable to the contract.
6-12 (b) A variable contract rate described by this article may
6-13 not be used in a contract in which the interest or time price
6-14 differential is precomputed and added into the amount of the
6-15 contract at the time the contract is made.
6-16 (c) A variable rate agreement for credit extended primarily
6-17 for personal, family, or household use must have the disclosures
6-18 identified for variable rate contracts as specified by the
6-19 regulations issued by the Federal Reserve Board under the Truth in
6-20 Lending Act (15 U.S.C. Section 1601 et seq.), as amended, or if
6-21 that Act does not apply to a transaction for personal, family, or
6-22 household use due to the amount of the transaction, the following
6-23 disclosure must be given in a size equal to at least 10-point type
6-24 that is boldface, capitalized, underlined, or otherwise set out
6-25 from surrounding material so as to be conspicuous:
6-26 "NOTICE TO CONSUMER: UNDER TEXAS LAW, IF YOU CONSENT TO
6-27 THIS AGREEMENT, YOU MAY BE SUBJECT TO A FUTURE RATE AS
6-28 HIGH AS 24 PERCENT PER YEAR."
6-29 Art. 1D.016. CHARGING OF RATE LOWER THAN AGREED RATE. A
6-30 creditor may charge an interest rate or amount of time price
6-31 differential that is lower than the rate agreed to in the contract.
6-32 SUBCHAPTER B. OPEN-END ACCOUNTS
6-33 Art. 1D.101. OPEN-END ACCOUNT: CEILINGS. (a) To use the
6-34 quarterly or annualized ceiling for setting the interest rate on
6-35 current and future open-end account balances, the agreement must
6-36 provide for use of the ceiling, and the creditor must give notice
6-37 of the interest rate after the date on which the quarterly or
6-38 annualized ceiling is computed but before the last day of the next
6-39 succeeding calendar quarter.
6-40 (b) If the annualized ceiling is used, the rate is effective
6-41 for the 12-month period beginning on the date on which the rate
6-42 takes effect for the account.
6-43 (c) If the quarterly ceiling is used, the rate is effective
6-44 for the three-month period beginning on the date on which the rate
6-45 takes effect for the account.
6-46 (d) If a quarterly or annualized ceiling is being used for
6-47 an account and if the rate for the applicable period is less than
6-48 or equal to the ceiling to be in effect for the succeeding period
6-49 of equal length, the creditor may leave that rate in effect for the
6-50 succeeding period.
6-51 (e) A creditor who has disclosed to an obligor that an
6-52 election may be renewed under Subsection (d) is not required to
6-53 give additional notice of a renewal under that subsection.
6-54 (f) To increase a previously agreed rate, a creditor shall
6-55 comply with Article 1D.103 before the end of the last calendar
6-56 quarter of the period in which the rate previously agreed to is in
6-57 effect. The ceiling in effect for that period remains the ceiling
6-58 until the parties to the agreement agree to a new rate.
6-59 Art. 1D.102. VARIABLE RATE OPEN-END ACCOUNT: CEILINGS. The
6-60 applicable rate ceiling for an open-end account agreement that
6-61 provides for a variable rate or amount according to an index,
6-62 formula, or provision of law disclosed to the obligor, other than a
6-63 variable rate commercial contract that is subject to Article
6-64 1D.004, is the annualized, quarterly, or weekly ceiling as
6-65 disclosed to the obligor. The annualized ceiling shall be adjusted
6-66 after each 12-month period, the quarterly ceiling shall be adjusted
6-67 after each three-month period, and the weekly ceiling shall be
6-68 adjusted weekly.
6-69 Art. 1D.103. OPEN-END ACCOUNT: CHANGE OF ANY AGREEMENT TERM.
7-1 (a) An agreement covering an open-end account may provide that the
7-2 creditor may change the terms of the agreement for current and
7-3 future balances of that account by giving notice of the change to
7-4 the obligor.
7-5 (b) A notice under this article to change a provision of an
7-6 account, including the rate, or the index or formula used to
7-7 compute the rate, must include:
7-8 (1) the new provision, the new rate, or the index or
7-9 formula to be used to compute the rate;
7-10 (2) the date on which the change is to take effect;
7-11 (3) the period for which the change is to be effective
7-12 or after which the rate will be adjusted;
7-13 (4) a statement of whether the change is to affect
7-14 current and future balances; and
7-15 (5) the obligor's rights under this article and the
7-16 procedures for the obligor to exercise those rights.
7-17 (c) A creditor who increases a rate shall include with a
7-18 notice required by this article a form that may be returned at the
7-19 expense of the creditor and on which the obligor may indicate by
7-20 checking or marking an appropriate box or by a similar arrangement
7-21 the obligor's decision not to continue the account. The form may
7-22 be included on a part of the account statement that is to be
7-23 returned to the creditor or on a separate sheet. In addition to
7-24 the requirements of Subsection (b), the notice must include:
7-25 (1) the address to which the obligor may send notice
7-26 of the obligor's election not to continue the open-end account; and
7-27 (2) the following statement printed in not less than
7-28 10-point type or computer equivalent:
7-29 "YOU MAY TERMINATE THIS AGREEMENT IF YOU DO NOT WISH TO
7-30 PAY THE NEW RATE."
7-31 (d) An obligor is considered to have agreed to a change
7-32 under this article if the creditor mails a notice required by this
7-33 article to the obligor's most recent address shown in the
7-34 creditor's records and:
7-35 (1) the obligor chooses to retain the privilege of
7-36 using the open-end account;
7-37 (2) the obligor or a person authorized by the obligor
7-38 accepts or uses an extension of credit after the fifth day after
7-39 the date on which the notice is mailed; or
7-40 (3) the obligor does not notify the creditor in
7-41 writing before the 21st day after the date on which the notice is
7-42 mailed that the obligor does not wish to continue to use the
7-43 open-end account.
7-44 (e) An obligor who rejects a rate change in accordance with
7-45 this article is entitled to pay the balance on the open-end account
7-46 at the rate and over the period in effect immediately before the
7-47 date of the proposed change and under the same minimum payment
7-48 terms provided by the agreement. Rejection of a new rate does not
7-49 accelerate payment of the balance due.
7-50 (f) The procedure provided by this article for changing the
7-51 terms of an agreement is in addition to other means of amending the
7-52 agreement provided by law.
7-53 Art. 1D.104. OPEN-END ACCOUNT: DISCLOSURE OF CERTAIN RATE
7-54 VARIATIONS. (a) Except as provided by Subsection (b), a variation
7-55 in an interest rate on an account resulting from operation of the
7-56 previously disclosed index, formula, or provision of law is not
7-57 required to be disclosed under Article 1D.101 or 1D.103.
7-58 (b) Except as inconsistent with federal law, the creditor on
7-59 an open-end account agreement that provides for a variable interest
7-60 rate according to an index, formula, or provision of law, that is
7-61 primarily for personal, family, or household use, and that is
7-62 subject to this chapter shall give to the obligor notice of a
7-63 change in the rate resulting from operation of the index, formula,
7-64 or provision of law. The notice must be given:
7-65 (1) by a document mailed on or before the beginning of
7-66 the first cycle for which the change becomes effective; or
7-67 (2) on or with:
7-68 (A) the billing statement for a billing cycle
7-69 that precedes the cycle for which the change becomes effective, if
8-1 the account is covered by Article 15.02(d); or
8-2 (B) any billing statement, if the account is not
8-3 covered by Article 15.02(d).
8-4 Art. 1D.105. OPEN-END ACCOUNT: CEILING FOR PLAN OR
8-5 ARRANGEMENT. If a creditor implements a quarterly or annualized
8-6 ceiling for a majority of the creditor's open-end accounts that are
8-7 under a particular plan or arrangement and that are for obligors in
8-8 this state, that ceiling is also the ceiling for all open-end
8-9 accounts that are opened or activated under that plan for obligors
8-10 in this state during the period that the election is in effect.
8-11 SUBCHAPTER C. OTHER PROVISIONS
8-12 Art. 1D.201. CONSUMER LOANS AND SECONDARY MORTGAGE LOANS.
8-13 (a) A loan for which the rate is authorized under this chapter is
8-14 subject to Chapter 3A if the loan is:
8-15 (1) extended primarily for personal, family, or
8-16 household use and not extended for a business, commercial,
8-17 investment, agricultural, or other similar purpose;
8-18 (2) not secured by a lien on real estate; and
8-19 (3) made by a person engaged in the business of making
8-20 or negotiating those types of loans.
8-21 (b) A loan for which the rate is authorized is subject to
8-22 Chapter 3A if the loan is:
8-23 (1) extended primarily for personal, family, or
8-24 household use and not for a business, commercial, investment,
8-25 agricultural, or other similar purpose;
8-26 (2) predominantly payable in monthly installments;
8-27 (3) described by Article 3A.001(3), 3A.501, or 3A.806;
8-28 and
8-29 (4) made, negotiated, or arranged by a person engaged
8-30 in the business of making, negotiating, or arranging those types of
8-31 loans.
8-32 (c) A person other than a bank, savings bank, or savings and
8-33 loan association engaged in the business of making loans described
8-34 by Subsection (a) or (b) must obtain a license under Chapter 3A.
8-35 (d) Except as inconsistent with this chapter:
8-36 (1) a person engaged in the business of extending
8-37 open-end credit primarily for personal, family, or household use
8-38 and who charges on an open-end account a rate or amount under
8-39 authority of this chapter is subject to the applicable chapter in
8-40 Subtitle 2 or Chapter 15; and
8-41 (2) a party to an account described in Subdivision (1)
8-42 or the party's assignees has all the rights, duties, and
8-43 obligations under that applicable chapter.
8-44 (e) Subsection (c) does not apply to a person who is subject
8-45 to Chapter 24, Insurance Code.
8-46 SUBCHAPTER D. LIMITATIONS ON APPLICABILITY OF CHAPTER
8-47 Art. 1D.301. AGREEMENT TO WHICH CHAPTER DOES NOT APPLY. The
8-48 rate ceilings provided by this chapter do not apply to an
8-49 agreement:
8-50 (1) under which credit is extended by the seller, or
8-51 an owner, subsidiary, or corporate affiliate of the seller, for a
8-52 home solicitation transaction as defined by Chapter 13; and
8-53 (2) that is secured by a lien on the obligor's
8-54 homestead.
8-55 Art. 1D.302. REQUIREMENTS INCONSISTENT WITH FEDERAL LAW.
8-56 (a) A person is not required to comply with a disclosure or notice
8-57 requirement of this chapter that is inconsistent with federal law
8-58 or regulation.
8-59 (b) A creditor may modify a disclosure or notice requirement
8-60 of this chapter to conform to federal law.
8-61 SUBCHAPTER E. ENFORCEMENT
8-62 Art. 1D.401. WHEN ACT OR OMISSION NOT VIOLATION. An act or
8-63 omission does not violate this title if the act or omission
8-64 conforms to an interpretation of this title that is in effect at
8-65 the time of the act or omission and that was made by:
8-66 (1) the consumer credit commissioner under Article
8-67 2.02A(10) of this title; or
8-68 (2) an appellate court of this state or the United
8-69 States.
9-1 Art. 1D.402. PENALTY FOR VIOLATION OF CHAPTER FOR CERTAIN
9-2 CONTRACTS SUBJECT TO SUBTITLE 2. (a) A person who contracts for,
9-3 charges, or receives under a contract subject to Chapter 3A, 6, 6A,
9-4 7, or 15, including a contract for an open-end account, a rate or
9-5 amount of time price differential that exceeds the maximum
9-6 applicable rate or amount authorized by the applicable chapter or
9-7 this chapter is subject to a penalty for that violation determined
9-8 under Chapter 8.
9-9 (b) For a contract described in Subsection (a) that contains
9-10 a rate or amount authorized under this chapter, the failure to
9-11 perform a duty or comply with a prohibition provided by this
9-12 chapter is subject to Chapter 8 as if this chapter were in Subtitle
9-13 2.
9-14 Art. 1D.403. PENALTY FOR VIOLATION OF CEILING IN CERTAIN
9-15 CONTRACTS. A written contract, other than a contract to which
9-16 Article 1D.402 applies, that directly or indirectly provides for a
9-17 rate that exceeds the rate authorized by this chapter and that is
9-18 not otherwise authorized by law, is subject to the penalty
9-19 prescribed by Chapter 1F.
9-20 Art. 1D.404. ENFORCEMENT BY CONSUMER CREDIT COMMISSIONER.
9-21 Subject to Article 2.01, the consumer credit commissioner shall
9-22 enforce Chapters 2, 3A, 6, 6A, 7, 8, 15, and 51 as they apply to
9-23 contracts subject to those chapters.
9-24 Art. 1D.405. EXAMINATION OF RECORDS; INSPECTIONS; RULES.
9-25 (a) Article 3A.902 applies to a transaction:
9-26 (1) that is made by a person who holds a license under
9-27 Chapter 3A;
9-28 (2) that is subject to Chapter 15 or 3A; and
9-29 (3) the rate of which is authorized by this chapter.
9-30 (b) Subchapter L, Chapter 3A, applies to a loan:
9-31 (1) that is subject to Chapter 3A; and
9-32 (2) the rate of which is authorized by this chapter.
9-33 Art. 1D.406. ENFORCEMENT BY CREDIT UNION COMMISSIONER. The
9-34 credit union commissioner shall enforce this chapter as it applies
9-35 to contracts subject to the Texas Credit Union Act (Article
9-36 2461-1.01 et seq., Vernon's Texas Civil Statutes).
9-37 Art. 1D.407. ENFORCEMENT BY DEPARTMENT OF INSURANCE. The
9-38 Texas Department of Insurance shall enforce this chapter as it
9-39 applies to contracts subject to Chapter 24, Insurance Code.
9-40 SUBCHAPTER F. EFFECT ON OTHER STATUTES OF USING OPTIONAL RATE
9-41 Art. 1D.501. APPLICABILITY OF CREDIT UNION ACT. Except as
9-42 inconsistent with this chapter:
9-43 (1) a person subject to the Texas Credit Union Act
9-44 (Article 2461-1.01 et seq., Vernon's Texas Civil Statutes) who
9-45 contracts for, charges, or receives a rate or amount authorized by
9-46 this chapter remains subject to that Act; and
9-47 (2) a party to a transaction described by Subdivision
9-48 (1) has all the rights provided by that Act.
9-49 Art. 1D.502. APPLICABILITY OF CHAPTER 24, INSURANCE CODE.
9-50 (a) Except as inconsistent with this chapter:
9-51 (1) a person subject to Chapter 24, Insurance Code,
9-52 who contracts for, charges, or receives an interest rate authorized
9-53 by this chapter remains subject to that chapter; and
9-54 (2) a party to an insurance premium finance agreement,
9-55 including an agreement for an open-end account, has all the rights
9-56 provided by Chapter 24, Insurance Code.
9-57 (b) The licensing requirements of Chapter 3A do not apply to
9-58 a transaction described by Subsection (a)(1). The penalty
9-59 provisions of this title do not apply to a transaction described in
9-60 Subsection (a)(1).
9-61 CHAPTER 1E. JUDGMENT INTEREST
9-62 SUBCHAPTER A. GENERAL PROVISIONS
9-63 Art. 1E.001. INTEREST RATE REQUIRED IN JUDGMENT. A money
9-64 judgment of a court in this state must specify the postjudgment
9-65 interest rate applicable to that judgment.
9-66 Art. 1E.002. JUDGMENT INTEREST RATE: INTEREST RATE OR TIME
9-67 PRICE DIFFERENTIAL IN CONTRACT. A money judgment of a court of
9-68 this state on a contract that provides for interest or time price
9-69 differential earns postjudgment interest at a rate equal to the
10-1 lesser of:
10-2 (1) the rate specified in the contract, which may be a
10-3 variable rate; or
10-4 (2) 18 percent a year.
10-5 Art. 1E.003. JUDGMENT INTEREST RATE: INTEREST RATE OR TIME
10-6 PRICE DIFFERENTIAL NOT IN CONTRACT. (a) A money judgment of a
10-7 court of this state to which Article 1E.002 does not apply,
10-8 including court costs awarded in the judgment and prejudgment
10-9 interest, if any, earns postjudgment interest at the rate
10-10 determined under this article.
10-11 (b) On the 15th day of each month, the consumer credit
10-12 commissioner shall determine the postjudgment interest rate to be
10-13 applied to a money judgment rendered during the succeeding calendar
10-14 month.
10-15 (c) The postjudgment interest rate is:
10-16 (1) the auction rate quoted on a discount basis for
10-17 52-week treasury bills issued by the United States government as
10-18 most recently published by the Federal Reserve Board before the
10-19 date of computation;
10-20 (2) 10 percent a year if the auction rate described by
10-21 Subdivision (1) is less than 10 percent; or
10-22 (3) 20 percent a year if the auction rate described by
10-23 Subdivision (1) is more than 20 percent.
10-24 Art. 1E.004. PUBLICATION OF JUDGMENT INTEREST RATE. The
10-25 consumer credit commissioner shall send to the secretary of state
10-26 the postjudgment interest rate for publication, and the secretary
10-27 shall publish the rate in the Texas Register.
10-28 Art. 1E.005. ACCRUAL OF JUDGMENT INTEREST. (a) Except as
10-29 provided by Subsection (b), postjudgment interest on a money
10-30 judgment of a court in this state accrues during the period
10-31 beginning on the date the judgment is rendered and ending on the
10-32 date the judgment is satisfied.
10-33 (b) If a case is appealed and a motion for extension of time
10-34 to file a brief is granted for a party who was a claimant at trial,
10-35 interest does not accrue for the period of extension.
10-36 Art. 1E.006. COMPOUNDING OF JUDGMENT INTEREST. Postjudgment
10-37 interest on a judgment of a court in this state compounds annually.
10-38 Art. 1E.007. JUDICIAL NOTICE OF JUDGMENT INTEREST RATE. A
10-39 court of this state shall take judicial notice of a published
10-40 postjudgment interest rate.
10-41 SUBCHAPTER B. PREJUDGMENT INTEREST IN WRONGFUL DEATH,
10-42 PERSONAL INJURY, OR PROPERTY DAMAGE CASE
10-43 Art. 1E.101. APPLICABILITY OF SUBCHAPTER. This subchapter
10-44 applies only to a wrongful death, personal injury, or property
10-45 damage case of a court of this state.
10-46 Art. 1E.102. PREJUDGMENT INTEREST REQUIRED IN CERTAIN CASES.
10-47 A judgment in a wrongful death, personal injury, or property damage
10-48 case earns prejudgment interest.
10-49 Art. 1E.103. PREJUDGMENT INTEREST RATE FOR WRONGFUL DEATH,
10-50 PERSONAL INJURY, OR PROPERTY DAMAGE CASE. The prejudgment interest
10-51 rate is equal to the postjudgment interest rate applicable at the
10-52 time of judgment.
10-53 Art. 1E.104. ACCRUAL OF PREJUDGMENT INTEREST. Except as
10-54 provided by Article 1E.105 or 1E.108, prejudgment interest accrues
10-55 on the amount of a judgment during the period beginning on the
10-56 earlier of the 180th day after the date the defendant receives
10-57 written notice of a claim or the date the suit is filed and ending
10-58 on the day preceding the date judgment is rendered. Prejudgment
10-59 interest is computed as simple interest and does not compound.
10-60 Art. 1E.105. EFFECT OF SETTLEMENT OFFER ON ACCRUAL OF
10-61 PREJUDGMENT INTEREST. (a) If judgment for a claimant is equal to
10-62 or less than the amount of a settlement offer of the defendant,
10-63 prejudgment interest does not accrue on the amount of the judgment
10-64 during the period that the offer may be accepted.
10-65 (b) If judgment for a claimant is more than the amount of a
10-66 settlement offer of the defendant, prejudgment interest does not
10-67 accrue on the amount of the settlement offer during the period that
10-68 the offer may be accepted.
10-69 Art. 1E.106. SETTLEMENT OFFER REQUIREMENTS TO PREVENT
11-1 PREJUDGMENT INTEREST ACCRUAL. To prevent the accrual of
11-2 prejudgment interest under this subchapter, a settlement offer must
11-3 be in writing and delivered to the claimant or the claimant's
11-4 attorney or representative.
11-5 Art. 1E.107. VALUE OF SETTLEMENT OFFER FOR COMPUTING
11-6 PREJUDGMENT INTEREST. If a settlement offer does not provide for
11-7 cash payment at the time of settlement, the amount of the
11-8 settlement offer for the purpose of computing prejudgment interest
11-9 is the cost or fair market value of the settlement offer at the
11-10 time it is made.
11-11 Art. 1E.108. ACCRUAL OF PREJUDGMENT INTEREST DURING PERIODS
11-12 OF TRIAL DELAY. (a) In addition to the exceptions provided by
11-13 Article 1E.105, a court may order that prejudgment interest does
11-14 not accrue during periods of delay in the trial.
11-15 (b) A court shall consider:
11-16 (1) periods of delay caused by a defendant; and
11-17 (2) periods of delay caused by a claimant.
11-18 SUBCHAPTER C. OTHER PREJUDGMENT INTEREST PROVISIONS
11-19 Art. 1E.201. PREJUDGMENT INTEREST RATE FOR CONDEMNATION
11-20 CASE. The prejudgment interest rate in a condemnation case is
11-21 equal to the postjudgment interest rate at the time of judgment and
11-22 is computed as simple interest.
11-23 SUBCHAPTER D. EXCEPTIONS TO APPLICATION OF CHAPTER
11-24 Art. 1E.301. EXCEPTION FOR DELINQUENT TAXES. This chapter
11-25 does not apply to a judgment that earns interest at a rate set by
11-26 Title 2, Tax Code.
11-27 Art. 1E.302. EXCEPTION FOR DELINQUENT CHILD SUPPORT. This
11-28 chapter does not apply to interest that accrues on an amount of
11-29 unpaid child support under Section 157.265, Family Code.
11-30 CHAPTER 1F. PENALTIES AND REMEDIES
11-31 SUBCHAPTER A. CIVIL LIABILITY; CRIMINAL PENALTY
11-32 Art. 1F.001. LIABILITY FOR USURIOUS INTEREST. (a) A
11-33 creditor who contracts for, charges, or receives interest that is
11-34 greater than the amount authorized by this subtitle is liable to
11-35 the obligor for an amount that is equal to the greater of:
11-36 (1) three times the amount computed by subtracting the
11-37 amount of interest allowed by law from the total amount of interest
11-38 contracted for, charged, or received; or
11-39 (2) $2,000 or 20 percent of the amount of the
11-40 principal, whichever is less.
11-41 (b) This article applies only to a contract or transaction
11-42 subject to this subtitle.
11-43 (c) A creditor who charges or receives interest in excess of
11-44 the amount contracted for, but not in excess of the maximum amount
11-45 authorized by law, is not subject to penalties for usury but may be
11-46 liable for other remedies and relief as provided by law.
11-47 Art. 1F.002. ADDITIONAL LIABILITY FOR MORE THAN TWICE
11-48 AUTHORIZED RATE OF INTEREST. (a) In addition to the amount
11-49 determined under Article 1F.001, a creditor who charges and
11-50 receives interest that is greater than twice the amount authorized
11-51 by this subtitle is liable to the obligor for:
11-52 (1) the principal amount on which the interest is
11-53 charged and received; and
11-54 (2) the interest and all other amounts charged and
11-55 received.
11-56 (b) This article applies only to a contract or transaction
11-57 subject to this subtitle.
11-58 Art. 1F.003. LIABILITY FOR USURIOUS LEGAL INTEREST. (a) A
11-59 creditor who charges or receives legal interest that is greater
11-60 than the amount authorized by this subtitle is liable to the
11-61 obligor for an amount that is equal to the greater of:
11-62 (1) three times the amount computed by subtracting the
11-63 amount of legal interest allowed by law from the total amount of
11-64 interest charged or received; or
11-65 (2) $2,000 or 20 percent of the amount of the
11-66 principal, whichever is less.
11-67 (b) This article applies only to a transaction subject to
11-68 this subtitle.
11-69 Art. 1F.004. ADDITIONAL LIABILITY FOR MORE THAN TWICE
12-1 AUTHORIZED RATE OF LEGAL INTEREST. (a) In addition to the amount
12-2 determined under Article 1F.003, a creditor who charges and
12-3 receives legal interest that is greater than twice the amount
12-4 authorized by this subtitle is liable to the obligor for:
12-5 (1) the principal amount on which the interest is
12-6 charged and received; and
12-7 (2) the interest and all other amounts charged and
12-8 received.
12-9 (b) This article applies only to a transaction subject to
12-10 this subtitle.
12-11 Art. 1F.005. ATTORNEY'S FEES. A creditor who is liable
12-12 under Article 1F.001 or 1F.003 is also liable to the obligor for
12-13 reasonable attorney's fees set by the court.
12-14 Art. 1F.006. LIMITATION ON FILING SUIT. (a) An action
12-15 under this chapter must be brought within four years from
12-16 the date on which the usurious interest was contracted for,
12-17 charged, or received. The action must be brought in the county in
12-18 which:
12-19 (1) the transaction was entered into;
12-20 (2) the usurious interest was charged or
12-21 received;
12-22 (3) the creditor resides at the time of the cause of
12-23 action if the creditor is a natural person;
12-24 (4) the creditor maintains its principal office if the
12-25 creditor is not a natural person; or
12-26 (5) the obligor resides at the time of the accrual of
12-27 the cause of action.
12-28 (b) In the case of a transaction in which a creditor has
12-29 contracted for or charged usurious interest, at least 60 days
12-30 before filing suit seeking usury penalties the obligor shall give
12-31 written notice to the creditor advising the creditor in reasonable
12-32 detail of the nature and amount of the violation.
12-33 (c) A creditor who receives a notice under this article may
12-34 correct the violation as provided by Article 1F.103 during the
12-35 period beginning on the date the notice is received and ending on
12-36 the 60th day after that date. A creditor who corrects a violation
12-37 as provided by this article is not liable to an obligor for the
12-38 violation.
12-39 (d) The notice provision is not applicable to a defendant
12-40 filing a counterclaim action alleging usury in an original action
12-41 by the creditor.
12-42 Art. 1F.007. EXTENT OF LIABILITY. The penalties provided by
12-43 this chapter are the only penalties for violation of this subtitle
12-44 for contracting for, charging, or receiving interest in an amount
12-45 that produces a rate in excess of the maximum rate allowed by law
12-46 and no common law penalties apply.
12-47 Art. 1F.008. CRIMINAL PENALTY. (a) A person commits an
12-48 offense if the person contracts for, charges, or receives interest
12-49 on a transaction for personal, family, or household use that is
12-50 greater than twice the amount authorized by this subtitle.
12-51 (b) An offense under this article is a misdemeanor
12-52 punishable by a fine of not more than $1,000.
12-53 (c) Each contract or transaction that violates this article
12-54 is a separate offense.
12-55 (d) This article applies only to a contract or transaction
12-56 subject to this subtitle.
12-57 SUBCHAPTER B. EXCEPTION FROM LIABILITY
12-58 Art. 1F.101. ACCIDENTAL AND BONA FIDE ERROR. A creditor is
12-59 not subject to penalty under this chapter for any usurious interest
12-60 that results from an accidental and bona fide error.
12-61 Art. 1F.102. LEGAL INTEREST DURING INTEREST-FREE PERIOD. A
12-62 person is not liable to an obligor solely because the person
12-63 charges or receives legal interest before the 30th day after the
12-64 date on which the debt is due.
12-65 Art. 1F.103. CORRECTION OF VIOLATION. (a) A creditor is
12-66 not liable to an obligor for a violation of this subtitle if:
12-67 (1) not later than the 60th day after the date the
12-68 creditor actually discovered the violation, the creditor corrects
12-69 the violation as to that obligor by taking any necessary action and
13-1 making any necessary adjustment, including the payment of interest
13-2 on a refund, if any, at the applicable rate provided for in the
13-3 contract of the parties; and
13-4 (2) the creditor gives written notice to the obligor
13-5 of the violation before the obligor gives written notice of the
13-6 violation or files an action alleging the violation.
13-7 (b) For the purposes of Subsection (a), a violation is
13-8 actually discovered at the time of the discovery of the violation
13-9 in fact and not to the time when an ordinarily prudent person,
13-10 through reasonable diligence, could or should have discovered or
13-11 known of the violation. Actual discovery of a violation in one
13-12 transaction may constitute actual discovery of the same violation
13-13 in other transactions if the violation is of such a nature that it
13-14 would necessarily be repeated and would be clearly apparent in the
13-15 other transactions without the necessity of examining all the other
13-16 transactions.
13-17 (c) For purposes of Subsection (a), written notice is given
13-18 when the notice is delivered to the person or to the person's duly
13-19 authorized agent or attorney of record personally, by telecopier,
13-20 or by United States mail to the address shown on the most recent
13-21 documents in the transaction. Deposit of the notice as registered
13-22 or certified mail in a postage paid, properly addressed wrapper in
13-23 a post office or official depository under the care and custody of
13-24 the United States Postal Service is prima facie evidence of the
13-25 delivery of the notice to the person to whom the notice is
13-26 addressed.
13-27 Art. 1F.104. CORRECTION EXCEPTION AVAILABLE TO ALL SIMILARLY
13-28 SITUATED. If in a single transaction more than one creditor may be
13-29 liable for a violation of this subtitle, compliance with Article
13-30 1F.103 by any of those creditors entitles each to the same
13-31 protection provided by that article.
13-32 Art. 1F.105. AMOUNTS PAYABLE PURSUANT TO A FINAL JUDGMENT.
13-33 A creditor is not liable to an obligor for a violation of this
13-34 subtitle if the creditor receives interest that has been awarded
13-35 pursuant to a final judgment that is no longer subject to
13-36 modification or reversal.
13-37 CHAPTER 1G. MISCELLANEOUS PROVISIONS RELATING TO INTEREST
13-38 Art. 1G.001. IMPOSITION OF SURCHARGE FOR USE OF CREDIT CARD.
13-39 (a) In a sale of goods or services, a seller may not impose a
13-40 surcharge on a buyer who uses a credit card for an extension of
13-41 credit instead of cash, a check, or a similar means of payment.
13-42 (b) This article does not apply to a state agency, county,
13-43 local governmental entity, or other governmental entity that
13-44 accepts a credit card for the payment of fees, taxes, or other
13-45 charges.
13-46 Art. 1G.002. BILLING CYCLE INTEREST LIMITATION ON OPEN-END
13-47 ACCOUNT WITHOUT MERCHANT DISCOUNT. (a) This article applies to an
13-48 open-end account agreement that provides for credit card
13-49 transactions:
13-50 (1) in which the creditor relies on one of the
13-51 ceilings authorized by Chapter 1D for the rate of interest; and
13-52 (2) in connection with which the creditor does not
13-53 impose or receive a merchant discount.
13-54 (b) Interest or time price differential may not be charged
13-55 for a billing cycle of an open-end account credit agreement if:
13-56 (1) the total amount of the obligor's payments during
13-57 the cycle equal or exceed the balance owed under the agreement at
13-58 the end of the preceding billing cycle; or
13-59 (2) an amount is not owed under the agreement at the
13-60 end of the preceding billing cycle.
13-61 Art. 1G.003. SALE OF OPEN-END ACCOUNT WITHOUT MERCHANT
13-62 DISCOUNT. A seller or lessor may sell an open-end account credit
13-63 agreement described by Article 1G.002(a) or any balance under that
13-64 agreement to a purchaser who purchases a substantial part of the
13-65 seller's or lessor's open-end account credit agreements or balances
13-66 under those agreements in accordance with Article 6.07. A charge,
13-67 fee, or discount on that sale:
13-68 (1) is not a merchant discount;
13-69 (2) does not disqualify the open-end account credit
14-1 agreement or a balance under that agreement from being subject to
14-2 Chapter 3A or from coverage under this article; and
14-3 (3) does not subject the account to the limitations
14-4 provided by Article 15.02(d).
14-5 Art. 1G.004. APPLICATION OF LICENSING REQUIREMENT AND
14-6 SUBTITLE 2 AND CHAPTER 15 TO CREDIT UNION OR EMPLOYEE BENEFIT PLAN.
14-7 (a) A credit union is not subject to Subtitle 2 or Chapter 15 and
14-8 is not required to obtain a license under this title.
14-9 (b) With respect to a loan that an employee benefit plan
14-10 that is subject to Title I of the Employee Retirement Income
14-11 Security Act of 1974 (29 U.S.C. Sections 1001-1114) makes to a
14-12 participant in the plan or a participant's beneficiary, the plan is
14-13 not subject to Subtitle 2 and is not required to obtain a license
14-14 under this title.
14-15 CHAPTER 1H. COMMERCIAL TRANSACTIONS
14-16 SUBCHAPTER A. GENERAL PROVISIONS
14-17 Art. 1H.001. DEFINITIONS. In this chapter:
14-18 (1) "Account purchase transaction" means an agreement
14-19 under which a person engaged in a commercial enterprise sells
14-20 accounts, instruments, documents, or chattel paper subject to this
14-21 subtitle at a discount, regardless of whether the person has a
14-22 repurchase obligation related to the transaction.
14-23 (2) "Affiliate" of an obligor means a person who
14-24 directly or indirectly, through one or more intermediaries,
14-25 controls, is controlled by, or is under common control with the
14-26 obligor. In this subdivision "control" means the possession,
14-27 directly or indirectly, of the power to direct or cause the
14-28 direction of the management and policies of a person, whether
14-29 through the ownership of voting securities, by contract, or
14-30 otherwise.
14-31 (3) "Asset-backed securities" means debt obligations
14-32 or certificates of beneficial ownership that:
14-33 (A) are a part of a single issue or single
14-34 series of securities in an aggregate of $1,000,000 or more and
14-35 issuable in one or more classes;
14-36 (B) are secured by a pledge of, or represent an
14-37 undivided ownership interest in:
14-38 (i) one or more fixed or revolving
14-39 financial assets that by their terms convert into cash within a
14-40 definite period; and
14-41 (ii) rights or other assets designed to
14-42 assure the servicing or timely distribution of proceeds to security
14-43 holders; and
14-44 (C) are issued for a business, commercial,
14-45 agricultural, investment, or similar purpose by a pass-through
14-46 entity.
14-47 (4) "Business entity" means a partnership,
14-48 corporation, joint venture, limited liability company, or other
14-49 business organization or association, however organized.
14-50 (5) "Commercial loan" means a loan that is made
14-51 primarily for business, commercial, investment, agricultural, or
14-52 similar purposes. The term does not include a loan made primarily
14-53 for personal, family, or household use.
14-54 (6) "Guaranty" means an agreement under which a
14-55 person:
14-56 (A) assumes, guarantees, or otherwise becomes
14-57 primarily or contingently liable for the payment or performance of
14-58 an obligation of another person;
14-59 (B) provides security for the payment or
14-60 performance of an obligation of another person, whether through the
14-61 creation of a lien or security interest or otherwise; or
14-62 (C) agrees to purchase, or to advance
14-63 consideration to purchase, the obligation or any property
14-64 constituting security for the payment or performance of the
14-65 obligation.
14-66 (7) "Pass-through entity" means a business entity,
14-67 association, grantor or common-law trust under state law, or
14-68 segregated pool of assets under federal tax law that, on the date
14-69 of original issuance of asset-backed securities, does not have
15-1 significant assets other than:
15-2 (A) assets pledged to or held for the benefit of
15-3 holders of the asset-backed securities; or
15-4 (B) assets pledged to or held for the benefit of
15-5 holders of other asset-backed securities previously issued.
15-6 (8) "Prepayment charge or penalty" means compensation
15-7 that is or will become due and payable, or was paid, by an obligor
15-8 to a creditor solely as a result of, or as a condition to, the
15-9 payment or maturity of all or a portion of the principal amount of
15-10 a loan before its stated maturity or its regularly scheduled date
15-11 or dates of payment, as a result of any election by the obligor to
15-12 pay all or a portion of the principal amount before its stated
15-13 maturity or its regularly scheduled date or dates of payment.
15-14 (9) "Qualified commercial loan" means:
15-15 (A) a commercial loan in the original principal
15-16 amount of $3,000,000 or more; or
15-17 (B) a renewal or extension of a commercial loan
15-18 in the original principal amount of $3,000,000 or more, whether the
15-19 principal amount of the loan at the time of its renewal or
15-20 extension is $3,000,000 or more.
15-21 Art. 1H.002. INTEREST. A creditor may contract for,
15-22 charge, and receive from an obligor on a commercial loan a rate or
15-23 amount of interest that does not exceed the applicable ceilings
15-24 computed in accordance with Chapter 1D. All other applicable
15-25 provisions, remedies, and penalties of this subtitle apply to a
15-26 commercial loan unless expressly provided otherwise by this
15-27 chapter.
15-28 Art. 1H.003. COMPUTATION OF TERM. A creditor and an obligor
15-29 may agree to compute the term and rate of a commercial loan on the
15-30 basis of a 360-day year consisting of twelve 30-day months. For
15-31 purposes of this chapter, each rate ceiling expressed as a rate per
15-32 year may mean a rate per year consisting of 360 days and of twelve
15-33 30-day months.
15-34 Art. 1H.004. DETERMINING RATES OF INTEREST BY SPREADING.
15-35 (a) To determine whether a commercial loan is usurious, the
15-36 interest rate is computed by amortizing or spreading using the
15-37 actuarial method during the stated term of the loan all interest at
15-38 any time contracted for, charged, or received in connection with
15-39 the loan.
15-40 (b) If a commercial loan is paid in full before the end of
15-41 the stated term of the loan and the amount of interest received for
15-42 the period that the loan exists exceeds the amount that produces
15-43 the maximum rate authorized by law for that period, the lender
15-44 shall:
15-45 (1) refund the amount of the excess to the borrower;
15-46 or
15-47 (2) credit the amount of the excess against amounts
15-48 owing under the loan.
15-49 (c) A lender who complies with Subsection (b) is not subject
15-50 to any of the penalties provided by law for contracting for,
15-51 charging, or receiving interest in excess of the maximum rate
15-52 authorized.
15-53 Art. 1H.005. PREPAYMENT CHARGE. A creditor and an obligor
15-54 may agree to a charge for prepayment in a loan subject to this
15-55 chapter. A charge for prepayment is not interest.
15-56 Art. 1H.006. CERTAIN AUTHORIZED CHARGES ON COMMERCIAL LOANS.
15-57 In addition to the interest authorized by this chapter, the parties
15-58 to a commercial loan may agree and stipulate for:
15-59 (1) a delinquency charge on the amount of any
15-60 installment or other amount in default for a period of not less
15-61 than 10 days in a reasonable amount not to exceed five percent of
15-62 the total amount of the installment; and
15-63 (2) a returned check fee in an amount not to exceed
15-64 $25 on any check, draft, order, or other instrument or form of
15-65 remittance that is returned unpaid or dishonored for any reason.
15-66 SUBCHAPTER B. SPECIAL PROVISIONS
15-67 Art. 1H.101. QUALIFIED COMMERCIAL LOAN. (a) The parties
15-68 to a qualified commercial loan agreement may contract for a rate or
15-69 amount of interest that does not exceed the applicable rate
16-1 ceiling.
16-2 (b) The parties may contract for the following additional
16-3 charges:
16-4 (1) a discount or commission that an obligor has paid
16-5 or agreed to pay to one or more underwriters of securities issued
16-6 by the obligor;
16-7 (2) an option or right to exchange, redeem, or convert
16-8 all or a portion of the principal amount of the loan, or interest
16-9 on the principal amount, for or into capital stock or other equity
16-10 securities of an obligor or of an affiliate of the obligor;
16-11 (3) an option or right to purchase capital stock or
16-12 other equity securities of an obligor or of an affiliate of the
16-13 obligor;
16-14 (4) an option or other right, whether by contract,
16-15 conveyance, or otherwise, to participate in or own a share of the
16-16 income, revenues, production, or profits:
16-17 (A) of an obligor or of an affiliate of the
16-18 obligor;
16-19 (B) of any segment of the business or operations
16-20 of an obligor or of an affiliate of the obligor; or
16-21 (C) derived or to be derived from any ownership
16-22 rights of an obligor or of an affiliate of the obligor in real or
16-23 personal property, including any proceeds of the sale or other
16-24 disposition of ownership rights; or
16-25 (5) any compensation realized as a result of the
16-26 receipt, exercise, sale, or other disposition of any option or
16-27 other right described by this subsection.
16-28 (c) A charge under Subsection (b) is not interest.
16-29 Art. 1H.102. ASSET-BACKED SECURITIES TRANSACTION. An amount
16-30 that is paid, passed through, or obligated to be paid or to be
16-31 passed through in connection with asset-backed securities or that
16-32 is not paid as a result of a discounted sale price to the holders
16-33 of asset-backed securities by a pass-through entity is not
16-34 interest. This article does not affect interest that is agreed on
16-35 and fixed by the parties to a written contract and paid, charged,
16-36 or received on the ultimate underlying assets pledged to or held
16-37 for the benefit of holders of asset-backed securities.
16-38 Art. 1H.103. ACCOUNT PURCHASE TRANSACTION. (a) An amount
16-39 of a discount in, or charged under, an account purchase transaction
16-40 is not interest.
16-41 (b) For the purposes of this chapter, the parties'
16-42 characterization of an account purchase transaction as a purchase
16-43 is conclusive that the account purchase transaction is not a
16-44 transaction for the use, forbearance, or detention of money.
16-45 SECTION 2. Subtitle 2, Title 79, Revised Statutes (Article
16-46 5069-2.01 et seq., Vernon's Texas Civil Statutes), is amended by
16-47 adding Chapter 3A to read as follows:
16-48 CHAPTER 3A. CONSUMER LOANS
16-49 SUBCHAPTER A. GENERAL PROVISIONS; APPLICABILITY OF CHAPTER
16-50 Art. 3A.001. DEFINITIONS. In this chapter:
16-51 (1) "Irregular transaction" means a loan that is
16-52 payable:
16-53 (A) in installments that are not consecutive or
16-54 monthly;
16-55 (B) with installments that are not substantially
16-56 equal in amount; or
16-57 (C) with a first scheduled installment due that
16-58 is not within one month and 15 days after the date of the loan.
16-59 (2) "Regular transaction" means a loan that is
16-60 payable:
16-61 (A) in consecutive monthly installments;
16-62 (B) with installments substantially equal in
16-63 amount; and
16-64 (C) with a first scheduled installment due
16-65 within one month and 15 days after the date of the loan.
16-66 (3) "Secondary mortgage loan" means a loan that is:
16-67 (A) secured in whole or in part by an interest,
16-68 including a lien or security interest, in real property that is:
16-69 (i) improved by a dwelling designed for
17-1 occupancy by four or fewer families; and
17-2 (ii) subject to one or more liens,
17-3 security interests, prior mortgages, or deeds of trust; and
17-4 (B) not to be repaid before the 91st day after
17-5 the date of the loan.
17-6 Art. 3A.002. INTEREST COMPUTATION METHODS. (a) The
17-7 scheduled installment earnings method is a method to compute an
17-8 interest charge by applying a daily rate to the unpaid balance of
17-9 the amount financed as if all payments will be made upon the
17-10 scheduled installment date. The daily rate is 1/365th of the
17-11 equivalent contract rate. Payments received before or after the
17-12 due date do not cause an adjustment in the amount of the scheduled
17-13 principal reduction.
17-14 (b) The true daily earnings method is a method to compute an
17-15 interest charge by applying a daily rate to the unpaid balance of
17-16 the amount financed. The daily rate is 1/365th of the equivalent
17-17 contract rate. The earned finance charge is computed by
17-18 multiplying the daily rate of the finance charge by the number of
17-19 days the actual principal balance is outstanding.
17-20 Art. 3A.003. PURCHASE FROM MORTGAGEE. For the purposes of
17-21 this chapter, a purchase from a mortgagee of an interest in a
17-22 secondary mortgage loan that was made to secure that loan is
17-23 treated as if it were a secondary mortgage loan.
17-24 Art. 3A.004. CONSTITUTIONAL INTEREST; EXEMPTION.
17-25 (a) Except as otherwise fixed by law, the maximum rate of interest
17-26 is 10 percent per year.
17-27 (b) A loan providing for a rate of interest that is 10
17-28 percent per year or less is not subject to this chapter.
17-29 Art. 3A.005. APPLICABILITY OF CHAPTER. (a) A loan is
17-30 subject to this chapter if the loan:
17-31 (1) provides for interest in excess of 10 percent per
17-32 year;
17-33 (2) is extended primarily for personal, family, or
17-34 household use;
17-35 (3) is not secured by a lien on real property; and
17-36 (4) is made by a person engaged in the business of
17-37 making, arranging, or negotiating those types of loans.
17-38 (b) A loan is subject to this chapter if the loan:
17-39 (1) provides for interest in excess of 10 percent per
17-40 year;
17-41 (2) is extended primarily for personal, family, or
17-42 household use;
17-43 (3) is predominantly payable in monthly installments;
17-44 (4) is described by Article 3A.001(3), 3A.501, or
17-45 3A.806; and
17-46 (5) is made by a person engaged in the business of
17-47 making, arranging, or negotiating those types of loans.
17-48 (c) This chapter does not apply to a secondary mortgage loan
17-49 made by a seller of property to secure all or part of the unpaid
17-50 purchase price.
17-51 SUBCHAPTER B. DESCRIPTION OF AND REQUIREMENTS FOR
17-52 AUTHORIZED ACTIVITIES
17-53 Art. 3A.101. AUTHORIZED ACTIVITIES; CEILING AMOUNT. (a) A
17-54 person must hold a license issued under this chapter or be a bank,
17-55 savings bank, or savings and loan association to:
17-56 (1) engage in the business of making, transacting, or
17-57 negotiating loans subject to this chapter; and
17-58 (2) contract for, charge, or receive, directly or
17-59 indirectly, in connection with a loan subject to this chapter, a
17-60 charge, including interest, compensation, consideration, or another
17-61 expense, authorized under this chapter that in the aggregate
17-62 exceeds the charges authorized under other law.
17-63 (b) A person may not use any device, subterfuge, or pretense
17-64 to evade the application of this article.
17-65 Art. 3A.102. ISSUANCE OF MORE THAN ONE LICENSE FOR A PERSON.
17-66 (a) The commissioner may issue more than one license to a person
17-67 on compliance with this chapter for each license.
17-68 (b) A person who is required to hold a license under this
17-69 chapter must hold a separate license for each office at which loans
18-1 are made, negotiated, or collected under this chapter.
18-2 (c) A license is not required under this chapter for a place
18-3 of business:
18-4 (1) devoted to accounting or other recordkeeping; and
18-5 (2) at which loans are not made, negotiated, or
18-6 collected under this chapter or Chapter 15.
18-7 Art. 3A.103. AREA OF BUSINESS; LOANS BY MAIL. (a) A lender
18-8 is not limited to making loans to residents of the community in
18-9 which the office for which the license or other authority is
18-10 granted.
18-11 (b) A lender may make, negotiate, arrange, and collect loans
18-12 by mail from a licensed office.
18-13 SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE
18-14 Art. 3A.201. APPLICATION REQUIREMENTS. (a) The application
18-15 for a license under this chapter must:
18-16 (1) be under oath;
18-17 (2) give the approximate location from which business
18-18 is to be conducted;
18-19 (3) identify the business's principal parties in
18-20 interest; and
18-21 (4) contain other relevant information that the
18-22 commissioner requires for the findings required under Article
18-23 3A.204.
18-24 (b) On the filing of one or more license applications, the
18-25 applicant shall pay to the commissioner an investigation fee of
18-26 $200.
18-27 (c) On the filing of each license application, the applicant
18-28 shall pay to the commissioner for the license's year of issuance a
18-29 license fee of:
18-30 (1) $100 if the license is granted not later than June
18-31 30; or
18-32 (2) $50 if the license is granted after June 30.
18-33 Art. 3A.202. BOND. (a) If the commissioner requires, an
18-34 applicant for a license under this chapter shall file with the
18-35 application a bond that is:
18-36 (1) in an amount not to exceed the total of:
18-37 (A) $5,000 for the first license; and
18-38 (B) $1,000 for each additional license;
18-39 (2) satisfactory to the commissioner; and
18-40 (3) issued by a surety company qualified to do
18-41 business as a surety in this state.
18-42 (b) The bond must be in favor of this state for the use of
18-43 this state and the use of a person who has a cause of action under
18-44 this chapter against the license holder.
18-45 (c) The bond must be conditioned on:
18-46 (1) the license holder's faithful performance under
18-47 this chapter and rules adopted under this chapter; and
18-48 (2) the payment of all amounts that become due to the
18-49 state or another person under this chapter during the calendar year
18-50 for which the bond is given.
18-51 (d) The aggregate liability of a surety to all persons
18-52 damaged by the license holder's violation of this chapter may not
18-53 exceed the amount of the bond.
18-54 Art. 3A.203. INVESTIGATION OF APPLICATION. On the filing of
18-55 an application and, if required, a bond, and on payment of the
18-56 required fees, the commissioner shall conduct an investigation to
18-57 determine whether to issue the license.
18-58 Art. 3A.204. APPROVAL OR DENIAL OF APPLICATION. (a) The
18-59 commissioner shall approve the application and issue to the
18-60 applicant a license to make loans under this chapter if the
18-61 commissioner finds that:
18-62 (1) the financial responsibility, experience,
18-63 character, and general fitness of the applicant are sufficient to:
18-64 (A) command the confidence of the public; and
18-65 (B) warrant the belief that the business will be
18-66 operated lawfully and fairly, within the purposes of this chapter;
18-67 and
18-68 (2) the applicant has net assets of at least $25,000
18-69 available for the operation of the business.
19-1 (b) If the commissioner does not find the eligibility
19-2 requirements of Subsection (a), the commissioner shall notify the
19-3 applicant.
19-4 (c) If an applicant requests a hearing on the application
19-5 not later than the 30th day after the date of notification under
19-6 Subsection (b), the applicant is entitled to a hearing not later
19-7 than the 60th day after the date of the request.
19-8 (d) The commissioner shall approve or deny the application
19-9 not later than the 60th day after the date of the filing of a
19-10 completed application with payment of the required fees, or if a
19-11 hearing is held, after the date of the completion of the hearing on
19-12 the application. The commissioner and the applicant may agree to a
19-13 later date in writing.
19-14 Art. 3A.205. DISPOSITION OF FEES ON DENIAL OF APPLICATION.
19-15 If the commissioner denies the application, the commissioner shall
19-16 retain the investigation fee and shall return to the applicant the
19-17 license fee submitted with the application.
19-18 SUBCHAPTER D. LICENSE
19-19 Art. 3A.251. NAME AND PLACE ON LICENSE. (a) A license must
19-20 state:
19-21 (1) the name of the license holder; and
19-22 (2) the address of the office from which the business
19-23 is to be conducted.
19-24 (b) A license holder may not conduct business under this
19-25 chapter under a name or at a place of business in this state other
19-26 than the name or office stated on the license.
19-27 Art. 3A.252. LICENSE DISPLAY. A license holder shall
19-28 display a license at the place of business provided on the license.
19-29 Art. 3A.253. MINIMUM ASSETS FOR LICENSE. (a) Except as
19-30 provided by Subsection (b) or (c), a license holder shall maintain
19-31 for each office for which a license is held net assets of at least
19-32 $25,000 that are used or readily available for use in conducting
19-33 the business of that office.
19-34 (b) A license holder who held a license under the Texas
19-35 Regulatory Loan Act and was issued a license to make loans under
19-36 that chapter as provided by Section 4, Chapter 274, Acts of the
19-37 60th Legislature, Regular Session, 1967, shall maintain for the
19-38 office for which that license is held net assets of at least
19-39 $15,000 that are used or readily available for use in conducting
19-40 the business of that office.
19-41 (c) A license holder who paid the pawnbroker's occupational
19-42 tax for 1967 and was issued a license to make loans under that
19-43 chapter as provided by Section 4, Chapter 274, Acts of the 60th
19-44 Legislature, Regular Session, 1967, is exempt from the minimum
19-45 assets requirement of Subsection (a) for the office for which that
19-46 license is held.
19-47 (d) If a license holder holds a license to which Subsection
19-48 (b) or (c) applies and subsequently transfers the license to
19-49 another person, the minimum assets required under Subsection (a)
19-50 shall apply to the license and the subsequent license holder.
19-51 Art. 3A.254. ANNUAL LICENSE FEE. (a) Not later than
19-52 December 1, a license holder shall pay to the commissioner for each
19-53 license held an annual fee for the year beginning the next January
19-54 1.
19-55 (b) The annual fee for a license under this chapter is $200
19-56 except that if, on September 30 preceding the date on which the
19-57 annual fee is due, the gross unpaid balance of loans regulated
19-58 under this chapter in the office for which the license is issued is
19-59 $100,000 or less, the annual fee is $100.
19-60 Art. 3A.255. EXPIRATION OF LICENSE ON FAILURE TO PAY ANNUAL
19-61 FEE. If the annual fee for a license is not paid before the 16th
19-62 day after the date on which the written notice of delinquency of
19-63 payment has been given to the license holder, the license expires
19-64 on the later of:
19-65 (1) that day; or
19-66 (2) December 31 of the last year for which an annual
19-67 fee was paid.
19-68 Art. 3A.256. LICENSE SUSPENSION OR REVOCATION. After notice
19-69 and a hearing the commissioner may suspend or revoke a license if
20-1 the commissioner finds that:
20-2 (1) the license holder failed to pay the annual
20-3 license fee, an examination fee, an investigation fee, or another
20-4 charge imposed by the commissioner under this chapter;
20-5 (2) the license holder, knowingly or without the
20-6 exercise of due care, violated this chapter or a rule adopted or
20-7 order issued under this chapter; or
20-8 (3) a fact or condition exists that, if it had existed
20-9 or had been known to exist at the time of the original application
20-10 for the license, clearly would have justified the commissioner's
20-11 denial of the application.
20-12 Art. 3A.257. CORPORATE CHARTER FORFEITURE. (a) A license
20-13 holder who violates this chapter is subject to revocation of the
20-14 holder's license and, if the license holder is a corporation,
20-15 forfeiture of its charter.
20-16 (b) When the attorney general is notified of a violation of
20-17 this chapter and revocation of a license, the attorney general
20-18 shall file suit in a district court in Travis County, if the
20-19 license holder is a corporation, for forfeiture of the license
20-20 holder's charter.
20-21 Art. 3A.258. LICENSE SUSPENSION OR REVOCATION FILED WITH
20-22 PUBLIC RECORDS. The decision of the commissioner on the suspension
20-23 or revocation of a license and the evidence considered by the
20-24 commissioner in making the decision shall be filed in the public
20-25 records of the commissioner.
20-26 Art. 3A.259. REINSTATEMENT OF SUSPENDED LICENSE; ISSUANCE OF
20-27 NEW LICENSE AFTER REVOCATION. The commissioner may reinstate a
20-28 suspended license or issue a new license on application to a person
20-29 whose license has been revoked if at the time of the reinstatement
20-30 or issuance no fact or condition exists that clearly would have
20-31 justified the commissioner's denial of an original application for
20-32 the license.
20-33 Art. 3A.260. SURRENDER OF LICENSE. A license holder may
20-34 surrender a license issued under this chapter by delivering to the
20-35 commissioner:
20-36 (1) the license; and
20-37 (2) a written notice of the license's surrender.
20-38 Art. 3A.261. EFFECT OF LICENSE SUSPENSION, REVOCATION, OR
20-39 SURRENDER. (a) The suspension, revocation, or surrender of a
20-40 license issued under this chapter does not affect the obligation of
20-41 a contract between the license holder and a debtor entered into
20-42 before the revocation, suspension, or surrender.
20-43 (b) Surrender of a license does not affect the license
20-44 holder's civil or criminal liability for an act committed before
20-45 surrender.
20-46 Art. 3A.262. MOVING AN OFFICE. (a) A license holder shall
20-47 give written notice to the commissioner before the 30th day
20-48 preceding the date the license holder moves an office from the
20-49 location provided on the license.
20-50 (b) The commissioner shall amend a holder's license
20-51 accordingly.
20-52 Art. 3A.263. TRANSFER OR ASSIGNMENT OF LICENSE. A license
20-53 may be transferred or assigned only with the approval of the
20-54 commissioner.
20-55 SUBCHAPTER E. INTEREST CHARGES ON NON-REAL PROPERTY LOANS
20-56 Art. 3A.301. MAXIMUM INTEREST CHARGE. (a) A loan contract
20-57 under this chapter that is a regular transaction and is not secured
20-58 by real property may provide for an interest charge on the cash
20-59 advance that does not exceed the amount of add-on interest equal to
20-60 the amount computed for the full term of the contract at an add-on
20-61 interest amount equal to:
20-62 (1) $18 for each $100 per year on the part of the cash
20-63 advance that is less than or equal to the amount computed under
20-64 Article 2.08, using the reference base amount of $300; and
20-65 (2) $8 for each $100 per year on the part of the cash
20-66 advance that is more than the amount computed for Subdivision (1)
20-67 but less than or equal to an amount computed under Article 2.08,
20-68 using the reference base amount of $2,500.
20-69 (b) For the purpose of Subsection (a):
21-1 (1) when the loan is made an interest charge may be
21-2 computed for the full term of the loan contract;
21-3 (2) if the period before the first installment due
21-4 date includes a part of a month that is longer than 15 days, then
21-5 that portion of a month may be considered a full month; and
21-6 (3) if a loan contract provides for precomputed
21-7 interest, the amount of the loan is the total of:
21-8 (A) the cash advance; and
21-9 (B) the amount of precomputed interest.
21-10 (c) A loan contract under this chapter that is an irregular
21-11 transaction and is not secured by real property may provide for an
21-12 interest charge, using any method or formula, that does not exceed
21-13 the amount that, having due regard for the schedule of installment
21-14 payments, would produce the same effective return as allowed under
21-15 Subsection (a) if the loan were payable in equal successive monthly
21-16 installments beginning one month from the date of the contract.
21-17 (d) A loan contract under this chapter that is not secured
21-18 by real property may provide for a rate or amount of interest
21-19 computed using the true daily earnings method or the scheduled
21-20 installment earnings method that does not exceed the alternative
21-21 interest rate as computed under Subchapter A, Chapter 1D. Interest
21-22 may accrue on the principal balance and amounts added to principal
21-23 after the date of the loan contract from time to time unpaid at the
21-24 rate provided for by the contract until the date of payment in full
21-25 or demand for payment in full.
21-26 Art. 3A.302. MAXIMUM CHARGE FOR LOAN WITH SINGLE REPAYMENT.
21-27 A loan contract that exceeds the maximum cash advance of Article
21-28 3A.401 and that is payable in a single installment may provide for
21-29 an interest charge on the cash advance that does not exceed a rate
21-30 or amount that would produce the same effective return as allowed
21-31 under Article 3A.301 having due consideration for the amount and
21-32 term of the loan. If a loan under this article is prepaid in full,
21-33 the lender may earn a minimum interest charge of $25.
21-34 Art. 3A.303. ADDITIONAL INTEREST FOR DEFAULT: REGULAR
21-35 TRANSACTION. (a) A loan contract that includes precomputed
21-36 interest and that is a regular transaction may provide for
21-37 additional interest for default if any part of an installment
21-38 remains unpaid after the 10th day after the date on which the
21-39 installment is due, including Sundays and holidays.
21-40 (b) A loan contract that uses the scheduled installment
21-41 earnings method and that is a regular transaction may provide for
21-42 additional interest for default if any part of an installment
21-43 remains unpaid after the 10th day after the date on which the
21-44 installment is due, including Sundays and holidays.
21-45 (c) The additional interest may not exceed five cents for
21-46 each $1 of a scheduled installment.
21-47 (d) Interest under this article may not be collected more
21-48 than once on the same installment.
21-49 Art. 3A.304. ADDITIONAL INTEREST FOR INSTALLMENT DEFERMENT:
21-50 REGULAR TRANSACTION. (a) On a loan contract that includes
21-51 precomputed interest and is a regular transaction, an authorized
21-52 lender may charge additional interest for the deferment of an
21-53 installment if:
21-54 (1) the entire amount of the installment is unpaid;
21-55 (2) no interest for default has been collected on the
21-56 installment; and
21-57 (3) payment of the installment is deferred for one or
21-58 more full months and the maturity of the contract is extended for a
21-59 corresponding period.
21-60 (b) The interest for deferment under Subsection (a) may not
21-61 exceed the amount computed by:
21-62 (1) taking the difference between the refund that
21-63 would be required for prepayment in full as of the date of
21-64 deferment and the refund that would be required for prepayment in
21-65 full one month before the date of deferment; and
21-66 (2) multiplying the results under Subdivision (1) by
21-67 the number of months in the deferment period.
21-68 (c) The amount of interest applicable to each deferred
21-69 balance or installment period occurring after a deferment period
22-1 remains the amount applicable to that balance or period under the
22-2 original loan contract.
22-3 (d) If a loan is prepaid in full during the deferment
22-4 period, the borrower shall receive, in addition to the refund
22-5 required under Subchapter H, a pro rata refund of that part of the
22-6 interest for deferment applicable to the number of full months
22-7 remaining in the deferment period on the payment date.
22-8 (e) For the purposes of this article, a deferment period is
22-9 the period during which a payment is not required or made because
22-10 of the deferment and begins on the day after the due date of the
22-11 scheduled installment that precedes the first installment being
22-12 deferred.
22-13 Art. 3A.305. COLLECTION OF DEFAULT OR DEFERMENT INTEREST.
22-14 Interest for default under Article 3A.303 or for installment
22-15 deferment under Article 3A.304 may be collected when it accrues or
22-16 at any time after it accrues.
22-17 Art. 3A.306. ADDITIONAL INTEREST FOR DEFAULT: IRREGULAR
22-18 TRANSACTION. A loan contract that includes precomputed interest
22-19 and that is an irregular transaction may provide for additional
22-20 interest for default using the true daily earnings method for the
22-21 period from the maturity date of an installment until the date the
22-22 installment is paid. The rate of the additional interest may not
22-23 exceed the maximum contract interest rate.
22-24 SUBCHAPTER F. ALTERNATE CHARGES FOR CERTAIN LOANS
22-25 Art. 3A.401. MAXIMUM CASH ADVANCE. The maximum cash advance
22-26 of a loan made under this subchapter is an amount computed under
22-27 Article 2.08, using the reference base amount of $100.
22-28 Art. 3A.402. ALTERNATE INTEREST CHARGE. Instead of the
22-29 charges authorized by Article 3A.301, a loan contract may provide
22-30 for:
22-31 (1) on a cash advance of less than $30, an acquisition
22-32 charge that is not more than $1 for each $5 of the cash advance;
22-33 (2) on a cash advance equal to or more than $30 but
22-34 not more than $100:
22-35 (A) an acquisition charge that is not more than
22-36 the amount equal to one-tenth of the amount of the cash advance;
22-37 and
22-38 (B) an installment account handling charge that
22-39 is not more than:
22-40 (i) $3 a month if the cash advance is not
22-41 more than $35;
22-42 (ii) $3.50 a month if the cash advance is
22-43 more than $35 but not more than $70; or
22-44 (iii) $4 a month if the cash advance is
22-45 more than $70; or
22-46 (3) on a cash advance of more than $100:
22-47 (A) an acquisition charge that is not more than
22-48 $10; and
22-49 (B) an installment account handling charge that
22-50 is not more than the ratio of $4 a month for each $100 of cash
22-51 advance.
22-52 Art. 3A.403. MAXIMUM INTEREST CHARGE FOR LOAN WITH SINGLE
22-53 REPAYMENT. A loan contract to which Article 3A.401 applies and
22-54 that is payable in a single installment may provide for an
22-55 acquisition charge and an interest charge on the cash advance that
22-56 does not exceed a rate or amount that would produce the same
22-57 effective return as allowed under Article 3A.402 having due
22-58 consideration for the amount and term of the loan. If a loan under
22-59 this article is prepaid in full, the lender may earn a minimum of
22-60 the acquisition charge and interest charge for one month.
22-61 Art. 3A.404. NO OTHER CHARGES AUTHORIZED. (a) On a loan
22-62 made under this subchapter a lender may not contract for, charge,
22-63 or receive an amount unless this subchapter authorizes the amount
22-64 to be charged.
22-65 (b) An insurance charge is not authorized on a loan made
22-66 under this subchapter.
22-67 Art. 3A.405. MAXIMUM LOAN TERM. The maximum term of a loan
22-68 made under this subchapter is:
22-69 (1) for a loan of $100 or less the lesser of:
23-1 (A) one month for each multiple of $10 of cash
23-2 advance; or
23-3 (B) six months; and
23-4 (2) for a loan of more than $100, one month for each
23-5 multiple of $20 of cash advance.
23-6 Art. 3A.406. REFUND. (a) An acquisition charge authorized
23-7 under Article 3A.402(1) or (2) is considered to be earned at the
23-8 time a loan is made and is not subject to refund.
23-9 (b) On the prepayment of a loan with a cash advance of $30
23-10 or more but not more than $100, the installment account handling
23-11 charge authorized under Article 3A.402(2) is subject to refund in
23-12 accordance with Subchapter H.
23-13 (c) On the prepayment of a loan with a cash advance of more
23-14 than $100, the acquisition charge and the installment account
23-15 handling charge authorized under Article 3A.402(3) are subject to
23-16 refund in accordance with Subchapter H.
23-17 Art. 3A.407. DEFAULT CHARGE; DEFERMENT OF PAYMENT. The
23-18 provisions of Subchapter E relating to additional interest for
23-19 default and additional interest for the deferment of installments
23-20 apply to a loan made under this subchapter.
23-21 Art. 3A.408. SCHEDULES FOR WEEKLY, BIWEEKLY, OR SEMIMONTHLY
23-22 INSTALLMENTS. The commissioner may prepare schedules that may be
23-23 used by an authorized lender for the repayment of a loan made under
23-24 this subchapter by weekly, biweekly, or semimonthly installments.
23-25 SUBCHAPTER G. INTEREST AND OTHER CHARGES ON SECONDARY
23-26 MORTGAGE LOANS
23-27 Art. 3A.501. MAXIMUM INTEREST CHARGE. (a) A secondary
23-28 mortgage loan that is a regular transaction may provide for an
23-29 interest charge on the cash advance that is precomputed and that
23-30 does not exceed a rate or amount that would produce the same
23-31 effective return as allowed under Subchapter A, Chapter 1D.
23-32 (b) For the purpose of Subsection (a):
23-33 (1) when the loan is made an interest charge may be
23-34 computed for the full term of the loan contract;
23-35 (2) if the period before the first installment due
23-36 date includes a part of a month that is longer than 15 days, that
23-37 portion of a month may be considered a full month; and
23-38 (3) if a loan contract provides for precomputed
23-39 interest, the amount of the loan is the total of:
23-40 (A) the cash advance; and
23-41 (B) the amount of precomputed interest.
23-42 (c) A secondary mortgage loan may provide for a rate or
23-43 amount of interest calculated using the true daily earnings method
23-44 or the scheduled installment earnings method that does not exceed
23-45 the alternative rate ceiling in Subchapter A, Chapter 1D. Interest
23-46 may accrue on the principal balance and amounts added to principal
23-47 after the date of the loan contract from time to time unpaid at the
23-48 rate provided for by the contract until the date of payment in full
23-49 or demand for payment in full. An interest charge under this
23-50 subsection may not be precomputed.
23-51 Art. 3A.502. ADDITIONAL INTEREST FOR DEFAULT: REGULAR
23-52 TRANSACTION. (a) A secondary mortgage loan that includes
23-53 precomputed interest and that is a regular transaction may provide
23-54 for additional interest for default if any part of an installment
23-55 remains unpaid after the 10th day after the date on which the
23-56 installment is due, including Sundays and holidays.
23-57 (b) A secondary mortgage loan contract that uses the
23-58 scheduled installment earnings method and that is a regular
23-59 transaction may provide for additional interest for default if any
23-60 part of an installment remains unpaid after the 10th day after the
23-61 date on which the installment is due, including Sundays and
23-62 holidays.
23-63 (c) The additional interest for default may not exceed five
23-64 cents for each $1 of a scheduled installment.
23-65 (d) Interest under this article may not be collected more
23-66 than once on the same installment.
23-67 Art. 3A.503. ADDITIONAL INTEREST FOR INSTALLMENT DEFERMENT:
23-68 REGULAR TRANSACTIONS. (a) On a secondary mortgage loan that
23-69 includes precomputed interest and is a regular transaction, an
24-1 authorized lender may charge additional interest for the deferment
24-2 of an installment if:
24-3 (1) the entire amount of the installment is unpaid;
24-4 (2) no interest for default has been collected on the
24-5 installment; and
24-6 (3) payment of the installment is deferred for one or
24-7 more full months and the maturity of the contract is extended for a
24-8 corresponding period.
24-9 (b) The interest for deferment under Subsection (a) may not
24-10 exceed the amount computed by:
24-11 (1) taking the difference between the refund that
24-12 would be required for prepayment in full as of the date of
24-13 deferment and the refund that would be required for prepayment in
24-14 full one month before the date of deferment; and
24-15 (2) multiplying the results under Subdivision (1) by
24-16 the number of months in the deferment period.
24-17 (c) The amount of interest applicable to each deferred
24-18 balance or installment period occurring after a deferment period
24-19 remains the amount applicable to that balance or period under the
24-20 original loan contract.
24-21 (d) If a loan is prepaid in full during the deferment
24-22 period, the borrower shall receive, in addition to the refund
24-23 required under Subchapter H, a pro rata refund of that part of the
24-24 interest for deferment applicable to the number of full months
24-25 remaining in the deferment period on the payment date.
24-26 (e) For the purposes of this article, a deferment period is
24-27 the period during which a payment is not required or made because
24-28 of the deferment and begins on the day after the due date of the
24-29 scheduled installment that precedes the first installment being
24-30 deferred.
24-31 Art. 3A.504. COLLECTION OF DEFAULT OR DEFERMENT INTEREST.
24-32 Interest for default under Article 3A.502 or for installment
24-33 deferment under Article 3A.503 may be collected when it accrues or
24-34 at any time after it accrues.
24-35 Art. 3A.505. ADDITIONAL INTEREST FOR DEFAULT: IRREGULAR
24-36 TRANSACTION. A secondary mortgage loan that includes precomputed
24-37 interest and that is an irregular transaction may provide for
24-38 additional interest for default using the true daily earnings
24-39 method for the period from the maturity date of an installment
24-40 until the date the installment is paid. The rate of the additional
24-41 interest may not exceed the maximum contract interest rate.
24-42 Art. 3A.506. DATE OF FIRST SCHEDULED INSTALLMENT. On a
24-43 secondary mortgage loan made under this chapter the due date of the
24-44 first installment may not be scheduled later than three months
24-45 after the date of the loan.
24-46 Art. 3A.507. AMOUNTS AUTHORIZED TO BE INCLUDED IN CONTRACT.
24-47 A secondary mortgage loan contract may provide for:
24-48 (1) reasonable fees or charges paid to the trustee in
24-49 connection with a deed of trust or similar instrument executed in
24-50 connection with the secondary mortgage loan, including fees for
24-51 enforcing the lien against or posting for sale, selling, or
24-52 releasing the property secured by the deed of trust;
24-53 (2) reasonable fees paid to an attorney who is not an
24-54 employee of the creditor in the collection of a delinquent
24-55 secondary mortgage loan;
24-56 (3) court costs and fees incurred in the collection of
24-57 the loan or foreclosure of a lien created by the loan; or
24-58 (4) a fee that does not exceed $15 for the return by a
24-59 depository institution of a dishonored check, negotiable order of
24-60 withdrawal, or share draft offered in full or partial payment of a
24-61 secondary mortgage loan.
24-62 Art. 3A.508. AMOUNTS AUTHORIZED TO BE COLLECTED OR ADDED TO
24-63 LOAN. (a) A lender or a person who is assigned a secondary
24-64 mortgage loan may collect on or before the closing of the loan, or
24-65 include in the principal of the loan:
24-66 (1) reasonable fees for:
24-67 (A) title examination and preparation of an
24-68 abstract of title by:
24-69 (i) an attorney who is not an employee of
25-1 the lender; or
25-2 (ii) a title company or property search
25-3 company authorized to do business in this state; or
25-4 (B) premiums or fees for title insurance or
25-5 title search for the benefit of the mortgagee and, at the
25-6 mortgagor's option, for title insurance or title search for the
25-7 benefit of the mortgagor;
25-8 (2) reasonable fees charged to the lender by an
25-9 attorney who is not a salaried employee of the lender for
25-10 preparation of the loan documents in connection with the mortgage
25-11 loan if the fees are evidenced by a statement for services rendered
25-12 addressed to the lender;
25-13 (3) charges prescribed by law that are paid to public
25-14 officials for determining the existence of a security interest or
25-15 for perfecting, releasing, or satisfying a security interest;
25-16 (4) reasonable fees for an appraisal of real property
25-17 offered as security for the loan prepared by a certified appraiser
25-18 who is not a salaried employee of the lender;
25-19 (5) the reasonable cost of a credit report;
25-20 (6) reasonable fees for a survey of real property
25-21 offered as security for the loan prepared by a registered surveyor
25-22 who is not a salaried employee of the lender;
25-23 (7) the premiums received in connection with the sale
25-24 of credit life insurance, credit accident and health insurance, or
25-25 other insurance that protects the mortgagee against default by the
25-26 mortgagor, the benefits of which are applied in whole or in part to
25-27 reduce or extinguish the loan balance; and
25-28 (8) reasonable fees relating to real property offered
25-29 as security for the loan that are incurred to comply with a
25-30 federally mandated program if the collection of the fees or the
25-31 participation in the program is required by a federal agency.
25-32 (b) Premiums for property insurance that conforms with
25-33 Article 3A.701 may be added to the loan contract.
25-34 SUBCHAPTER H. REFUND OF PRECOMPUTED INTEREST
25-35 Art. 3A.601. REFUND OF PRECOMPUTED INTEREST: REGULAR
25-36 TRANSACTION. (a) This article applies to a loan contract that
25-37 includes precomputed interest and that is a regular transaction.
25-38 (b) If the contract is prepaid in full, including payment in
25-39 cash or by a new loan or renewal of the loan, or if the lender
25-40 demands payment in full of the unpaid balance, after the first
25-41 installment due date but before the final installment due date, the
25-42 lender shall refund or credit to the borrower the amount computed
25-43 by:
25-44 (1) dividing the sum of the periodic balances
25-45 scheduled to follow the installment date after the date of the
25-46 prepayment or demand, as appropriate, by the sum of all the
25-47 periodic balances under the schedule of payments set out in the
25-48 loan contract; and
25-49 (2) multiplying the total interest contracted for
25-50 under Article 3A.301, 3A.402, or 3A.501, as appropriate, by the
25-51 result under Subdivision (1).
25-52 (c) If the prepayment in full or demand for payment in full
25-53 occurs before the first installment due date, the lender shall:
25-54 (1) retain an amount computed by:
25-55 (A) dividing 30 into the amount that could be
25-56 retained if the first installment period were one month and the
25-57 loan were prepaid in full on the date the first installment is due;
25-58 and
25-59 (B) multiplying the result under Paragraph (A)
25-60 by the number of days in the period beginning on the date the loan
25-61 was made and ending on the date of the prepayment or demand; and
25-62 (2) refund or credit to the borrower the amount
25-63 computed by subtracting the amount retained under Subdivision (1)
25-64 from the interest contracted for under Article 3A.301, 3A.402, or
25-65 3A.501, as appropriate.
25-66 Art. 3A.602. REFUND OF PRECOMPUTED INTEREST ON CONTRACT:
25-67 IRREGULAR TRANSACTION OR TERM OF MORE THAN 60 MONTHS. (a) This
25-68 article applies to a loan contract that:
25-69 (1) includes precomputed interest and to which Article
26-1 3A.601 does not apply; or
26-2 (2) has a term of more than 60 months.
26-3 (b) If the contract is prepaid in full, including payment in
26-4 cash or by a new loan or renewal of the loan, or if the lender
26-5 demands payment in full of the unpaid balance before final maturity
26-6 of the contract, the lender earns interest for the period beginning
26-7 on the date of the loan and ending on the date of the prepayment or
26-8 demand, as applicable, an amount that does not exceed the amount
26-9 allowed by Subsection (f) using the simple annual interest rate
26-10 under the contract.
26-11 (c) If prepayment in full or demand for payment in full
26-12 occurs during an installment period, the lender may retain, in
26-13 addition to interest that accrued during any elapsed installment
26-14 periods, an amount computed by:
26-15 (1) multiplying the simple annual interest rate under
26-16 the contract by the unpaid principal balance of the loan determined
26-17 according to the schedule of payments to be outstanding on the
26-18 immediately preceding installment due date;
26-19 (2) dividing 365 into the product under Subdivision
26-20 (1); and
26-21 (3) multiplying the number of days in the period
26-22 beginning on the day after the installment due date and ending on
26-23 the date of the prepayment or demand, as appropriate, by the result
26-24 obtained under Subdivision (2).
26-25 (d) The lender may also earn interest on an addition to
26-26 principal, or other permissible charges, added to the loan after
26-27 the date of the loan contract, accruing at the simple annual
26-28 interest rate under the contract from the date of the addition
26-29 until the date paid or the date the lender demands payment in full
26-30 of the total unpaid balance under the loan contract.
26-31 (e) The lender shall refund or credit to the borrower the
26-32 amount computed by subtracting the total amount retained under
26-33 Subsections (b), (c), and (d) from the total amount of interest
26-34 contracted for and precomputed in the amount of loan.
26-35 (f) For the purposes of this article, the simple annual
26-36 interest rate under a contract is equal to the rate that the
26-37 contract would have produced over its full term if, assuming that
26-38 each scheduled payment under the contract is paid on the date due
26-39 and considering the amount of each scheduled installment and the
26-40 time of each scheduled installment period, the rate were applied to
26-41 the unpaid principal amounts determined to be outstanding from time
26-42 to time according to the schedule of payments.
26-43 Art. 3A.603. NO REFUND ON PARTIAL PREPAYMENT OR OF AMOUNT
26-44 LESS THAN $1. A refund is not required under this subchapter for a
26-45 partial prepayment or if the amount to be refunded is less than $1.
26-46 SUBCHAPTER I. INSURANCE
26-47 Art. 3A.701. REQUIRED PROPERTY INSURANCE. (a) On a loan
26-48 that is subject to Subchapter E with a cash advance of $300 or
26-49 more, a lender may request or require a borrower to insure tangible
26-50 personal property offered as security for the loan.
26-51 (b) On a secondary mortgage loan, a lender may request or
26-52 require a borrower to provide property insurance as security
26-53 against reasonable risks of loss, damage, and destruction.
26-54 (c) The insurance coverage and the premiums or charges for
26-55 the coverage must bear a reasonable relationship to:
26-56 (1) the amount, term, and conditions of the loan;
26-57 (2) the value of the collateral; and
26-58 (3) the existing hazards or risk of loss, damage, or
26-59 destruction.
26-60 (d) The insurance may not:
26-61 (1) cover unusual or exceptional risks; or
26-62 (2) provide coverage not ordinarily included in
26-63 policies issued to the general public.
26-64 (e) A creditor may not require the purchase of duplicate
26-65 property insurance if the creditor has knowledge that the borrower:
26-66 (1) has valid and collectible insurance covering the
26-67 property; and
26-68 (2) has provided a loss payable endorsement sufficient
26-69 to protect the creditor.
27-1 (f) For purposes of determining the knowledge required under
27-2 Subsection (e), a creditor may rely on a written consent to
27-3 purchase insurance in which the borrower is given the opportunity
27-4 to disclose the existence of other coverage.
27-5 Art. 3A.702. CREDIT LIFE INSURANCE, CREDIT HEALTH AND
27-6 ACCIDENT INSURANCE, OR INVOLUNTARY UNEMPLOYMENT INSURANCE. (a) On
27-7 a loan made under this chapter that is subject to Subchapter E with
27-8 a cash advance of $100 or more, a lender may:
27-9 (1) offer or request that a borrower provide credit
27-10 life insurance and credit health and accident insurance as
27-11 additional protection for the loan; and
27-12 (2) offer involuntary unemployment insurance to the
27-13 borrower at the time the loan is made.
27-14 (b) A lender may not require that the borrower accept or
27-15 provide the insurance described by Subsection (a).
27-16 (c) On a secondary mortgage loan made under this chapter, a
27-17 lender may request or require that a borrower provide credit life
27-18 insurance and credit accident and health insurance as additional
27-19 protection for the loan.
27-20 Art. 3A.703. MAXIMUM AMOUNT OF INSURANCE COVERAGE. (a) At
27-21 any time the total amount of the policies of credit life insurance
27-22 in force on one borrower on one loan contract may not exceed the
27-23 greater of:
27-24 (1) the total amount repayable under the loan contract
27-25 if the loan is an irregular transaction; or
27-26 (2) the greater of the scheduled or actual amount of
27-27 unpaid indebtedness if the loan is a regular transaction.
27-28 (b) At any time the total amount of the policies of credit
27-29 accident and health insurance or involuntary unemployment insurance
27-30 in force on one borrower on one loan contract may not exceed the
27-31 total amount repayable under the loan contract, and the amount of
27-32 each periodic indemnity payment may not exceed the scheduled
27-33 periodic installment payment on the loan.
27-34 Art. 3A.704. INSURANCE NOTICE. (a) If insurance is
27-35 required on a loan made under this chapter, the lender shall give
27-36 to the borrower written notice that clearly and conspicuously
27-37 states that:
27-38 (1) insurance is required in connection with the loan;
27-39 and
27-40 (2) the borrower as an option may furnish the required
27-41 insurance coverage through an insurance policy that is in existence
27-42 and that is owned or controlled by the borrower or an insurance
27-43 policy obtained from an insurance company authorized to do business
27-44 in this state.
27-45 (b) If insurance requested or required on a loan made under
27-46 this chapter is sold or obtained by a lender at a premium or rate
27-47 of charge that is not fixed or approved by the commissioner of
27-48 insurance, the lender shall notify the borrower of that fact. If
27-49 notice is required under Subsection (a), the lender shall include
27-50 that fact in the notice required by Subsection (a).
27-51 (c) A notice required under this article may be:
27-52 (1) a separate writing delivered with the loan
27-53 contract; or
27-54 (2) a part of the loan contract.
27-55 Art. 3A.705. INSURANCE MAY BE FURNISHED BY BORROWER.
27-56 (a) If insurance is required on a loan made under this chapter,
27-57 the borrower may furnish the insurance coverage through an
27-58 insurance policy that is in existence and that is owned or
27-59 controlled by the borrower or an insurance policy obtained by the
27-60 borrower from an insurance company authorized to do business in
27-61 this state.
27-62 (b) If insurance is required on a loan made under this
27-63 chapter and the insurance is sold or obtained by the lender at a
27-64 premium or rate of charge that is not fixed or approved by the
27-65 commissioner of insurance, the borrower has the option of
27-66 furnishing the required insurance under this article at any time
27-67 before the sixth day after the date of the loan.
27-68 Art. 3A.706. BORROWER'S FAILURE TO PROVIDE REQUIRED
27-69 INSURANCE. (a) If a borrower fails to obtain or maintain
28-1 insurance coverage required under a loan contract or requests the
28-2 lender to obtain that coverage, the lender may obtain substitute
28-3 insurance coverage that is substantially equivalent to or more
28-4 limited than the coverage originally required.
28-5 (b) If a loan is subject to Subchapter E, the lender may
28-6 obtain insurance to cover only the interest of the lender as a
28-7 secured party if the borrower does not request that the borrower's
28-8 interest be covered.
28-9 (c) Insurance obtained under this article must comply with
28-10 Articles 3A.707 and 3A.708.
28-11 (d) The lender may add the amount advanced by the lender for
28-12 insurance coverage obtained under this article to the unpaid
28-13 balance of the loan contract and may charge interest on that amount
28-14 from the time it is added to the unpaid balance until it is paid.
28-15 The rate of additional interest may not exceed the rate that the
28-16 loan contract would produce over its full term if each scheduled
28-17 payment were paid on the due date.
28-18 Art. 3A.707. REQUIREMENTS FOR INCLUDING INSURANCE CHARGE IN
28-19 CONTRACT. Insurance for which a charge is included in a loan
28-20 contract must be written:
28-21 (1) at lawful rates;
28-22 (2) in accordance with the Insurance Code; and
28-23 (3) by a company authorized to do business in this
28-24 state.
28-25 Art. 3A.708. FURNISHING OF INSURANCE DOCUMENT TO BORROWER.
28-26 If a lender obtains insurance for which a charge is included in the
28-27 loan contract, the lender, not later than the 30th day after the
28-28 date on which the loan contract is executed, shall deliver, mail,
28-29 or cause to be mailed to the borrower at the borrower's address
28-30 specified in the contract one or more policies or certificates of
28-31 insurance that clearly set forth:
28-32 (1) the amount of the premium;
28-33 (2) the kind of insurance provided;
28-34 (3) the coverage of the insurance; and
28-35 (4) all terms, including options, limitations,
28-36 restrictions, and conditions, of each insurance policy.
28-37 Art. 3A.709. LENDER'S DUTY IF INSURANCE IS ADJUSTED OR
28-38 TERMINATED. (a) If insurance for which a charge is included in or
28-39 added to the loan contract is canceled, adjusted, or terminated,
28-40 the lender shall:
28-41 (1) credit to the amount unpaid on the loan the amount
28-42 of the refund received by the lender for unearned insurance
28-43 premiums, less the amount of the refund that is applied to the
28-44 purchase by the lender of similar insurance; and
28-45 (2) if the amount to be credited under Subdivision (1)
28-46 is more than the unpaid balance, refund promptly to the borrower
28-47 the difference between those amounts.
28-48 (b) A cash refund is not required under this article if the
28-49 amount of the refund is less than $1.
28-50 Art. 3A.710. PAYMENT FOR INSURANCE FROM LOAN PROCEEDS. A
28-51 lender, including an officer, agent, or employee of the lender, who
28-52 accepts insurance under this subchapter as protection for a loan:
28-53 (1) may deduct the premium or identifiable charge for
28-54 the insurance from the proceeds of the loan; and
28-55 (2) shall pay the deducted amounts to the insurance
28-56 company writing the insurance.
28-57 Art. 3A.711. INSURANCE GAIN NOT INTEREST. Any gain, or
28-58 advantage to the lender or the lender's employee, officer,
28-59 director, agent, general agent, affiliate, or associate from
28-60 insurance under this subchapter or the provision or sale of
28-61 insurance under this subchapter is not additional interest or an
28-62 additional charge in connection with a loan made under this chapter
28-63 except as specifically provided by this chapter.
28-64 Art. 3A.712. ACTION UNDER SUBCHAPTER NOT SALE OF INSURANCE.
28-65 Arranging for insurance or collecting an identifiable charge as
28-66 authorized by this subchapter is not a sale of insurance.
28-67 Art. 3A.713. REQUIRED AGENT OR BROKER PROHIBITED. A lender
28-68 may not by any direct or indirect method require the purchase of
28-69 insurance from an agent or broker designated by the lender.
29-1 Art. 3A.714. DECLINATION OF EQUAL INSURANCE COVERAGE
29-2 PROHIBITED. A lender may not decline at any time existing
29-3 insurance coverage providing substantially equal benefits that
29-4 comply with this subchapter.
29-5 Art. 3A.715. EFFECT OF UNAUTHORIZED INSURANCE CHARGE.
29-6 (a) If a lender charges for insurance an amount that is not
29-7 authorized under this subchapter, the lender:
29-8 (1) is not entitled to collect an amount for insurance
29-9 or interest on an amount for insurance; and
29-10 (2) shall refund to the borrower or credit to the
29-11 borrower's account all amounts collected for insurance and interest
29-12 collected on those amounts.
29-13 (b) An overcharge that results from an accidental or bona
29-14 fide error may be corrected as provided by Article 8.01.
29-15 (c) The remedy provided by this article is not exclusive of
29-16 any other remedy or penalty provided by this subtitle.
29-17 Art. 3A.716. NONFILING INSURANCE. (a) Instead of charging
29-18 fees for the filing, recording, and releasing of a document
29-19 securing a loan to which Subchapter E applies, an authorized lender
29-20 may include in the loan contract a charge for a nonfiling insurance
29-21 premium.
29-22 (b) The amount of a charge under Subsection (a) may not
29-23 exceed the amount of fees authorized for filing and recording an
29-24 original financing statement in the standard form prescribed by the
29-25 secretary of state.
29-26 (c) A lender may receive an amount authorized under this
29-27 article only if the lender purchases nonfiling insurance in
29-28 connection with the loan contract.
29-29 (d) A lender is not required to furnish to a borrower a
29-30 policy or certificate of insurance evidencing nonfiling insurance.
29-31 SUBCHAPTER J. AUTHORIZED LENDER'S DUTIES AND AUTHORITY
29-32 Art. 3A.801. DELIVERY OF INFORMATION TO BORROWER. (a) When
29-33 a loan is made under this chapter, the lender shall deliver to the
29-34 borrower, or to one borrower if there is more than one, a copy of
29-35 each document signed by the borrower, including the note or loan
29-36 contract, and a written statement in English that contains:
29-37 (1) the names and addresses of the borrower and the
29-38 lender; and
29-39 (2) any type of insurance for which a charge is
29-40 included in the loan contract and the charge to the borrower for
29-41 the insurance.
29-42 (b) If the note or loan contract shows the information
29-43 required by Subsection (a), the written statement is not required.
29-44 Art. 3A.802. RECEIPT FOR CASH PAYMENT. A lender shall give
29-45 a receipt to a person making a cash payment on a loan.
29-46 Art. 3A.803. ACCEPTANCE OF PREPAYMENT. At any time during
29-47 regular business hours, the lender shall accept prepayment of a
29-48 loan in full or, if the amount tendered is less than the amount
29-49 required to prepay the loan in full, prepayment of an amount equal
29-50 to one or more full installments.
29-51 Art. 3A.804. RETURN OF INSTRUMENTS TO BORROWER ON REPAYMENT.
29-52 Within a reasonable time after a loan is repaid in full or an
29-53 open-end account is terminated according to the terms of the
29-54 contract, a lender shall cancel and return to a borrower any
29-55 instrument, including a note, assignment, security agreement, or
29-56 mortgage, or pledged property that:
29-57 (1) secured the loan; and
29-58 (2) does not secure another indebtedness of the
29-59 borrower to the lender.
29-60 Art. 3A.805. AGREEMENT FOR MORE THAN ONE LOAN OR CASH
29-61 ADVANCE. (a) A lender and a borrower may enter an agreement under
29-62 which one or more loans or cash advances are from time to time made
29-63 to or for the account of the borrower.
29-64 (b) An agreement under this article may provide for a
29-65 maximum loan charge on the unpaid principal amounts from time to
29-66 time outstanding at a rate that does not exceed the rate that
29-67 produces the maximum interest charge computed under Article 3A.301
29-68 for an equivalent loan amount.
29-69 (c) An agreement under this article must be written and
30-1 signed by the lender and borrower.
30-2 (d) An agreement under this article must contain:
30-3 (1) the date of the agreement;
30-4 (2) the name and address of each borrower; and
30-5 (3) the name and address of the lender.
30-6 (e) If a charge for insurance coverage is to be included in
30-7 a loan contract, an agreement under this article must clearly set
30-8 forth a simple statement of the amount of the charge or the method
30-9 by which the charge is to be computed.
30-10 (f) The lender shall deliver a copy of an agreement under
30-11 this article to the borrower.
30-12 (g) The commissioner may prescribe monthly rates of charge
30-13 that produce the maximum interest charge computed under Article
30-14 3A.301 for use under Subsection (b) of this article.
30-15 Art. 3A.806. AGREEMENT TO MODIFY TERM OF SECONDARY MORTGAGE
30-16 LOAN CONTRACT. (a) A lender and a borrower may enter into an
30-17 agreement under which a term of a secondary mortgage loan contract
30-18 is amended, restated, or rescheduled.
30-19 (b) An agreement under this article must be written and
30-20 signed by the lender and borrower.
30-21 (c) An agreement under this article must contain:
30-22 (1) the date of the agreement;
30-23 (2) the name and address of the lender; and
30-24 (3) the name and address of each borrower.
30-25 (d) The lender shall deliver a copy of an agreement under
30-26 this article to the borrower.
30-27 SUBCHAPTER K. PROHIBITIONS ON AUTHORIZED LENDER
30-28 Art. 3A.851. OBLIGATION UNDER MORE THAN ONE CONTRACT.
30-29 (a) An authorized lender may not induce or permit a person or a
30-30 husband and wife to be directly or indirectly obligated under more
30-31 than one loan contract at any time for the purpose or with the
30-32 effect of obtaining an amount of interest that is more than the
30-33 amount of interest that is otherwise authorized under this chapter
30-34 for a loan of that aggregate amount with a maximum interest charge
30-35 computed under:
30-36 (1) Article 3A.301(a);
30-37 (2) Article 3A.402; or
30-38 (3) both Articles 3A.301(a) and 3A.402.
30-39 (b) Subsection (a) does not prohibit the purchase of a bona
30-40 fide retail installment contract or revolving charge agreement of a
30-41 borrower for the purchase of goods or services.
30-42 (c) A lender who purchases all or substantially all of the
30-43 loan contracts of another authorized lender and who at the time of
30-44 purchase has a loan contract with a borrower whose loan contract is
30-45 purchased may collect principal and authorized charges according to
30-46 the terms of each loan contract.
30-47 Art. 3A.852. AMOUNT AUTHORIZED. (a) A lender may not
30-48 directly or indirectly charge, contract for, or receive an amount
30-49 that is not authorized under this chapter in connection with a loan
30-50 to which this chapter applies. This includes, but is not limited
30-51 to, any fees, compensation, bonuses, commissions, brokerage,
30-52 discounts, expenses and every other charge of any nature
30-53 whatsoever, whether of the types listed herein or not.
30-54 (b) On a loan subject to Subchapter E or a secondary
30-55 mortgage loan subject to Subchapter G a lender may assess and
30-56 collect from the borrower an amount incurred by the lender for:
30-57 (1) court costs;
30-58 (2) attorney's fees assessed by a court;
30-59 (3) a fee authorized by law for filing, recording, or
30-60 releasing in a public office a security for a loan;
30-61 (4) a reasonable amount spent for repossessing,
30-62 storing, preparing for sale, or selling any security;
30-63 (5) a fee for recording a lien on or transferring a
30-64 certificate of title to a motor vehicle offered as security for a
30-65 loan made under this chapter; or
30-66 (6) a premium or an identifiable charge received in
30-67 connection with the sale of insurance authorized under this
30-68 chapter.
30-69 Art. 3A.853. SECURITY FOR LOAN. (a) A lender may not take
31-1 as security for a loan made under this chapter an assignment of
31-2 wages.
31-3 (b) A lender may not take as security for a loan made under
31-4 Subchapter E or Subchapter F a lien on real property other than a
31-5 lien created by law on the recording of an abstract of judgment.
31-6 (c) A lender may take as security for a loan made under
31-7 Subchapter E or Subchapter F an assignment of:
31-8 (1) a warrant drawn against a state fund; or
31-9 (2) a claim against a state fund or a state agency.
31-10 Art. 3A.854. CONFESSION OF JUDGMENT; POWER OF ATTORNEY. A
31-11 lender may not take a confession of judgment or a power of attorney
31-12 authorizing the lender or a third person to confess judgment or to
31-13 appear for a borrower in a judicial proceeding.
31-14 Art. 3A.855. DISCLOSURE OF AMOUNT FINANCED AND SCHEDULE OF
31-15 PAYMENTS. A lender may not take a promise to pay or loan
31-16 obligation that does not disclose the amount financed and the
31-17 schedule of payments, except for an open-end account.
31-18 Art. 3A.856. INSTRUMENT WITH BLANK PROHIBITED. A lender may
31-19 not take an instrument in which a blank is left to be filled in
31-20 after the loan is made.
31-21 Art. 3A.857. WAIVER OF BORROWER'S RIGHT PROHIBITED. A
31-22 lender may not take an instrument in which a borrower waives any
31-23 right accruing to the borrower under this chapter.
31-24 Art. 3A.858. MAXIMUM LOAN TERM. A lender may not enter a
31-25 loan contract under Article 3A.301(a) under which the borrower
31-26 agrees to make a scheduled payment of principal more than:
31-27 (1) 37 calendar months after the date on which the
31-28 contract is made, if the contract is for a cash advance of $1,500
31-29 or less;
31-30 (2) 49 calendar months after the date on which the
31-31 contract is made, if the contract is for a cash advance of more
31-32 than $1,500 but not more than $3,000; or
31-33 (3) 60 months after the date on which the contract is
31-34 made, if the contract is for a cash advance of more than $3,000.
31-35 SUBCHAPTER L. ADMINISTRATION OF CHAPTER
31-36 Art. 3A.901. ADOPTION OF RULES. (a) The Finance Commission
31-37 of Texas may adopt rules to enforce this chapter.
31-38 (b) The commissioner shall recommend proposed rules to the
31-39 Finance Commission of Texas.
31-40 (c) A rule shall be entered in a permanent book. The book
31-41 is a public record and shall be kept in the office of the
31-42 commissioner.
31-43 Art. 3A.902. EXAMINATION OF LENDERS; ACCESS TO RECORDS. (a)
31-44 The commissioner or the commissioner's representative shall, at the
31-45 times the commissioner considers necessary:
31-46 (1) examine each place of business of each authorized
31-47 lender; and
31-48 (2) investigate the lender's transactions, including
31-49 loans, and records, including books, accounts, papers, and
31-50 correspondence, to the extent the transactions and records pertain
31-51 to the business regulated under this chapter.
31-52 (b) The lender shall:
31-53 (1) give the commissioner or the commissioner's
31-54 representative free access to the lender's office, place of
31-55 business, files, safes, and vaults; and
31-56 (2) allow the commissioner or the commissioner's
31-57 authorized representative to make a copy of an item that may be
31-58 investigated under Subsection (a)(2).
31-59 (c) During an examination the commissioner or the
31-60 commissioner's representative may administer oaths and examine any
31-61 person under oath on any subject pertinent to a matter that the
31-62 commissioner is authorized or required to consider, investigate, or
31-63 secure information about under this chapter.
31-64 (d) Information obtained under this article is confidential.
31-65 (e) A lender's violation of Subsection (b) is a ground for
31-66 the suspension or revocation of the lender's license.
31-67 Art. 3A.903. GENERAL INVESTIGATION. (a) To discover a
31-68 violation of this chapter or to obtain information required under
31-69 this chapter, the commissioner or the commissioner's representative
32-1 may investigate the records, including books, accounts, papers, and
32-2 correspondence, of a person, including an authorized lender, whom
32-3 the commissioner has reasonable cause to believe is violating this
32-4 chapter regardless of whether the person claims to not be subject
32-5 to this chapter.
32-6 (b) For the purposes of this article, a person who
32-7 advertises, solicits, or otherwise represents that the person is
32-8 willing to make a loan with a cash advance less than or equal to
32-9 the amount computed under Article 2.08 using the reference base
32-10 amount of $2,500 is presumed to be engaged in the business
32-11 described by Article 3A.101.
32-12 Art. 3A.904. CERTIFICATE; CERTIFIED DOCUMENT. On
32-13 application by any person and on payment of any associated cost,
32-14 the commissioner shall furnish under the commissioner's seal and
32-15 signed by the commissioner or an assistant of the commissioner:
32-16 (1) a certificate of good standing; or
32-17 (2) a certified copy of a license, rule, or order.
32-18 Art. 3A.905. TRANSCRIPT OF HEARING: PUBLIC. The transcript
32-19 of a hearing held by the commissioner under this chapter is a
32-20 public record.
32-21 Art. 3A.906. APPOINTMENT OF AGENT. (a) An authorized
32-22 lender shall maintain on file with the commissioner a written
32-23 appointment of a resident of this state as the lender's agent for
32-24 service of all judicial or other process or legal notice, unless
32-25 the lender has appointed an agent under another statute of this
32-26 state.
32-27 (b) If an authorized lender does not comply with this
32-28 article, service of all judicial or other process or legal notice
32-29 may be made on the commissioner.
32-30 Art. 3A.907. PAYMENT OF EXAMINATION COSTS AND ADMINISTRATION
32-31 EXPENSES. An authorized lender shall pay to the commissioner an
32-32 amount assessed by the commissioner to cover the direct and
32-33 indirect cost of an examination of the lender under Article 3A.902
32-34 and a proportionate share of general administrative expense.
32-35 Art. 3A.908. AUTHORIZED LENDER'S RECORDS. (a) An
32-36 authorized lender shall maintain records of each loan made under
32-37 this chapter as is necessary to enable the commissioner to
32-38 determine whether the lender is complying with this chapter.
32-39 (b) An authorized lender shall keep the record, make it
32-40 available in this state, or, if the lender makes, transacts, or
32-41 negotiates loans principally by mail, keep the records or make them
32-42 available at the lender's principal place of business, until the
32-43 later of:
32-44 (1) the fourth anniversary of the date of the loan; or
32-45 (2) the second anniversary of the date on which the
32-46 final entry is made in the record.
32-47 (c) The records described by Subsection (a) must be prepared
32-48 in accordance with accepted accounting practices.
32-49 (d) The commissioner shall accept a lender's system of
32-50 records if the system discloses the information reasonably required
32-51 under Subsection (a).
32-52 (e) An authorized lender shall keep all obligations signed
32-53 by borrowers at an office in this state designated by the lender
32-54 unless an obligation is transferred under an agreement that gives
32-55 the commissioner access to the obligation.
32-56 Art. 3A.909. ANNUAL REPORT. (a) Each year, not later than
32-57 May 1, or a subsequent date set by the commissioner, an authorized
32-58 lender shall file with the commissioner a report that contains
32-59 relevant information required by the commissioner concerning the
32-60 business and operations during the preceding calendar year for each
32-61 office of the lender in this state where business is conducted
32-62 under this chapter.
32-63 (b) A report under this article must be:
32-64 (1) under oath; and
32-65 (2) in the form prescribed by the commissioner.
32-66 (c) A report under this article is confidential.
32-67 (d) Annually the commissioner shall prepare and publish a
32-68 consolidated analysis and recapitulation of reports filed under
32-69 this article.
33-1 Art. 3A.910. CONDUCTING ASSOCIATED BUSINESS. An authorized
33-2 lender may conduct business under this chapter in an office, office
33-3 suite, room, or place of business in which any other business is
33-4 conducted or in combination with any other business unless the
33-5 commissioner:
33-6 (1) after a hearing, finds that the lender's
33-7 conducting of the other business in that office, office suite,
33-8 room, or place of business has concealed evasions of this chapter;
33-9 and
33-10 (2) orders the lender in writing to desist from that
33-11 conduct in that office, office suite, room, or place of business.
33-12 SECTION 3. Article 2.02A(1), Title 79, Revised Statutes
33-13 (Article 5069-2.02A, Vernon's Texas Civil Statutes), is amended to
33-14 read as follows:
33-15 (1) The Consumer Credit Commissioner shall enforce Chapters
33-16 2, 3A, [3, 4, 5,] 6, 6A, 7, 8, 9, and 15 of this title and the
33-17 Texas Pawnshop Act (Article 5069-51.01 et seq., Vernon's Texas
33-18 Civil Statutes) in person or through assistant commissioners or any
33-19 examiner or employee.
33-20 SECTION 4. Article 2.03(1), Title 79, Revised Statutes
33-21 (Article 5069-2.03, Vernon's Texas Civil Statutes), is amended to
33-22 read as follows:
33-23 (1) The investigative and enforcement authority under this
33-24 Article applies only to Chapters 2, 3A, [3, 4, 5,] 6, 6A, 7, 8, 9,
33-25 and 15 of this title and the Texas Pawnshop Act (Article 5069-51.01
33-26 et seq., Vernon's Texas Civil Statutes). Upon receipt of written
33-27 complaint or other reasonable cause to believe that any provision
33-28 of those statutes are being violated by any person, the Consumer
33-29 Credit Commissioner may request such person to furnish information
33-30 in regard to a specific loan or retail transaction or business
33-31 practice alleged to be in violation of those statutes.
33-32 SECTION 5. Article 2.03A(l), Title 79, Revised Statutes
33-33 (Article 5069-2.03A, Vernon's Texas Civil Statutes), is amended to
33-34 read as follows:
33-35 (l) When the judgment of the court becomes final, the court
33-36 shall proceed under this subsection. If the person paid the amount
33-37 of the penalty and if that amount is reduced or is not upheld by
33-38 the court, the court shall order that the appropriate amount plus
33-39 accrued interest be remitted to the person. The rate of the
33-40 interest is the rate authorized by Chapter 1E [Article 1.05] of
33-41 this title, and the interest shall be paid for the period beginning
33-42 on the date the penalty was paid and ending on the date the penalty
33-43 is remitted.
33-44 SECTION 6. Article 2.07, Title 79, Revised Statutes (Article
33-45 5069-2.07, Vernon's Texas Civil Statutes), is amended to read as
33-46 follows:
33-47 Art. 2.07. CREDIT AND LOANS TO INDIVIDUALS. No authorized
33-48 lender under Chapter 3A [Chapter 3] of this Title or other person
33-49 involved in transactions subject to this Title may deny an
33-50 individual who has the capacity to contract credit or loans in his
33-51 or her name, or restrict or limit the credit or loan granted on the
33-52 basis of sex, race, color, religion, national origin, marital
33-53 status, or age or because all or part of the individual's income
33-54 derives from a public assistance program in the form of social
33-55 security or supplemental security income, or the individual has in
33-56 good faith exercised any right under the Consumer Credit Protection
33-57 Act (15 U.S.C. Section 1601 et seq.; 18 U.S.C. Section 891 et
33-58 seq.). In interpreting this section, the courts and administrative
33-59 agencies shall be guided by the federal Equal Credit Opportunity
33-60 Act and regulations thereunder and interpretations thereof by the
33-61 Federal Reserve Board to the extent that that Act and those
33-62 regulations and interpretations pertain to conduct prohibited by
33-63 this section.
33-64 SECTION 7. Article 2.08(1), Title 79, Revised Statutes
33-65 (Article 5069-2.08, Vernon's Texas Civil Statutes), is amended to
33-66 read as follows:
33-67 (1) The dollar amount of the ceilings on the cash advance,
33-68 and the brackets establishing ranges of cash advances or balances
33-69 to which certain rates of charges apply in this Title, except the
34-1 brackets in Articles 3A.401, 3A.402, and 3A.858 [Section (1),
34-2 Article 3.16; Section (2), Article 3.16; Article 3.21]; Section
34-3 (9)(e), Article 6.02; Section (12)(a), Article 6.02; and Article
34-4 15.02, are changed as of the effective date of this Act and shall
34-5 be, subject to Subsections (a) and (b), Section (2) of this
34-6 Article, changed from time to time in accordance with the changes
34-7 in the Consumer Price Index for Urban Wage Earners and Clerical
34-8 Workers: U.S. City Average, All Items, 1967=100, compiled by the
34-9 Bureau of Labor Statistics, United States Department of Labor, and
34-10 referred to in this Article as the Index. The Index for December
34-11 1967 is the Reference Base Index period for the purpose of
34-12 determining the adjustment to be made in the rate brackets and
34-13 ceilings.
34-14 SECTION 8. Article 6.01(q), Title 79, Revised Statutes
34-15 (Article 5069-6.01, Vernon's Texas Civil Statutes), is amended to
34-16 read as follows:
34-17 (q) "Credit card issuer" means a person who issues a
34-18 card, plate, or other identification device used to obtain goods or
34-19 services under a retail credit card arrangement. The term does not
34-20 include any person who honors the credit card but did not issue it,
34-21 nor any bank, savings and loan association, credit union, person
34-22 licensed to do business under the provisions of Chapter 3A [3 or 4]
34-23 of this Subtitle, nor any other person who is regularly and
34-24 principally engaged in the business of lending money to persons for
34-25 personal, family, and household purposes.
34-26 SECTION 9. Article 6.02(15), Title 79, Revised Statutes
34-27 (Article 5069-6.02, Vernon's Texas Civil Statutes), is amended to
34-28 read as follows:
34-29 (15) The dollar amount of the rate brackets prescribed by
34-30 Section (9)(a) of this Article are subject to adjustment from time
34-31 to time under Article 2.08 of this Title. As an alternative to the
34-32 rates and amounts of time price differential provided by Section
34-33 (9)(a) of this Article, the parties may agree to any rate or amount
34-34 of time price differential not exceeding a rate or amount
34-35 authorized by Chapter 1D [Article 1.04] of this Title.
34-36 SECTION 10. Article 6.03(5), Title 79, Revised Statutes
34-37 (Article 5069-6.03, Vernon's Texas Civil Statutes), is amended to
34-38 read as follows:
34-39 (5) The dollar amount of the rate brackets in this Article
34-40 is subject to adjustment from time to time under Article 2.08 of
34-41 this Title. As an alternative to the rates or amounts of time
34-42 price differential provided by Section (3) of this Article, the
34-43 parties may agree to any rate or amount of time price differential
34-44 not exceeding a rate or amount authorized by Chapter 1D [Article
34-45 1.04] of this Title or to the rate or amount of the market
34-46 competitive rate ceiling published by the Consumer Credit
34-47 Commissioner as provided in Section (6) of this Article. The
34-48 provisions of Chapter 1D [Article 1.04] of this Title applicable to
34-49 open-end accounts apply to this Article.
34-50 SECTION 11. Articles 6.03(6)(a) and (e), Title 79, Revised
34-51 Statutes (Article 5069-6.03, Vernon's Texas Civil Statutes), are
34-52 amended to read as follows:
34-53 (a) The Consumer Credit Commissioner shall cause to be
34-54 published in the Texas Register, in its first publication following
34-55 September 1 of each year, the market competitive rate ceiling.
34-56 This ceiling shall be effective on the following October 1 for a
34-57 period of one year. The ceiling shall be based on an annual
34-58 percentage rate, whether it is deemed to be interest, time price
34-59 differential, or other similar charge permitted by the laws of any
34-60 state, imposed on a person residing in Texas by a creditor in any
34-61 other state extending credit by the use of a retail charge
34-62 agreement or a credit card. The rate of time price differential
34-63 for the market competitive rate ceiling shall not exceed the
34-64 ceiling in Article 1D.009(d) [Section (c) of Article 1.11] of this
34-65 Title or be below the minimum ceiling in Article 1D.009(a) [Section
34-66 (b)(1) of Article 1.04] of this Title.
34-67 (e) A retail charge agreement of the parties providing
34-68 for a computation under this Article or Chapter 1D [Article 1.04]
34-69 of this Title may be amended pursuant to Article 1D.103 [Section
35-1 (i) of Article 1.04] of this Title to implement the market
35-2 competitive rate ceiling or change a rate or amount. Any holder
35-3 electing to implement the market competitive rate ceiling as to an
35-4 account existing on the effective date of this Act must allow the
35-5 obligor to pay the balance then existing at the rate previously
35-6 agreed to and at the minimum payment terms previously agreed to.
35-7 For this purpose, payments on an account may be applied by the
35-8 holder to the balance existing on the account on the effective date
35-9 of this Act prior to applying them to credit extended after the
35-10 effective date of this Act. The ceiling under this Section may be
35-11 implemented at any time and shall remain in effect until an
35-12 alternative ceiling is implemented. An alternative ceiling may be
35-13 implemented only at the end of a ceiling year as set out in
35-14 Subsection (a) of this Section.
35-15 SECTION 12. Article 6.05, Title 79, Revised Statutes
35-16 (Article 5069-6.05, Vernon's Texas Civil Statutes), is amended to
35-17 read as follows:
35-18 Art. 6.05. PROHIBITED PROVISIONS. No retail installment
35-19 contract or retail charge agreement shall:
35-20 (1) Provide that the holder may accelerate the
35-21 maturity of any part or all of the amount owing thereunder unless
35-22 (a) the buyer is in default in the performance of any of his
35-23 obligations, or (b) the holder in good faith believes that the
35-24 prospect of payment or performance is impaired;
35-25 (2) Contain a power of attorney to confess judgment,
35-26 or an assignment of wages;
35-27 (3) Authorize the seller or holder or other person
35-28 acting on his behalf to enter upon the buyer's premises unlawfully
35-29 or to commit any breach of the peace in the repossession of goods;
35-30 (4) Provide for a waiver of the buyer's rights of
35-31 action against the seller or holder or other person acting therefor
35-32 for any illegal act committed in the collection of payments under
35-33 the contract or agreement or in the repossession of goods;
35-34 (5) Contain any provision by which the buyer executes
35-35 a power of attorney appointing the seller or holder or other person
35-36 acting on his behalf, as the buyer's agent in the repossession of
35-37 goods;
35-38 (6) Provide that the buyer agrees not to assert
35-39 against the seller any claim or defense arising out of the sale;
35-40 (7) Provide for or grant a first lien upon real estate
35-41 to secure such obligation, except, (a) such lien as is created by
35-42 law upon the recording of an abstract of judgment or (b) such lien
35-43 as is provided for or granted by a contract or series of contracts
35-44 for the sale or construction and sale of a structure to be used as
35-45 a residence so long as the time price differential does not exceed
35-46 an annual percentage rate permitted under either this Chapter or
35-47 Chapter 1D [Article 1.04] of this Title.
35-48 SECTION 13. Article 6.12, Title 79, Revised Statutes
35-49 (Article 5069-6.12, Vernon's Texas Civil Statutes), is amended to
35-50 read as follows:
35-51 Art. 6.12. Rates for prepaid funeral benefits regulated by
35-52 Article 548b, Vernon's Texas Civil Statutes. Prepaid funeral
35-53 benefits regulated by Article 548b, Vernon's Texas Civil Statutes,
35-54 may be financed only at rates authorized by Chapter 1D [Article
35-55 1.04] of this title.
35-56 SECTION 14. Article 6.13, Title 79, Revised Statutes
35-57 (Article 5069-6.13, Vernon's Texas Civil Statutes), is amended to
35-58 read as follows:
35-59 Art. 6.13. Rates for medical and dental services. Medical
35-60 or dental services may be financed only at rates authorized by
35-61 Chapter 1D [Article 1.04] of this title.
35-62 SECTION 15. Article 6A.03(7), Title 79, Revised Statutes
35-63 (Article 5069-6A.03, Vernon's Texas Civil Statutes), is amended to
35-64 read as follows:
35-65 (7) As an alternative to the rates and amounts of time price
35-66 differential that may be charged under this section, the parties
35-67 may agree to any rate or amount of time price differential not
35-68 exceeding a rate or amount authorized by Chapter 1D [Article 1.04]
35-69 of this title.
36-1 SECTION 16. Article 6A.16(b)(1), Title 79, Revised Statutes
36-2 (Article 5069-6A.16, Vernon's Texas Civil Statutes), is amended to
36-3 read as follows:
36-4 (1) Each creditor governed by this chapter who is not
36-5 a credit union or an authorized lender under Chapter 3A [3] of this
36-6 title shall register with the Office of Consumer Credit
36-7 Commissioner. Each creditor shall pay an annual fee of $15 for
36-8 each location at which credit transactions subject to this chapter
36-9 are originated, serviced, or collected. The commissioner by rule
36-10 may establish procedures to facilitate the registration and
36-11 collection of fees, including rules staggering the due dates of the
36-12 fees throughout the year. If a creditor fails to renew the
36-13 creditor's registration, the commissioner shall, not later than 30
36-14 days after the expiration of the registration, notify the creditor
36-15 of the expiration, and of the procedures applicable to renewal. A
36-16 registration renewal is timely if filed with the commissioner,
36-17 together with the annual registration fee, not later than 30 days
36-18 after receipt of notice of expiration. A creditor who fails to
36-19 renew timely as required by this section is subject to the
36-20 penalties set forth in Section (2) of this Article.
36-21 SECTION 17. Article 7.03(7), Title 79, Revised Statutes
36-22 (Article 5069-7.03, Vernon's Texas Civil Statutes), is amended to
36-23 read as follows:
36-24 (7) As an alternative to the time price differential
36-25 authorized by Section (1) of this Article, the parties may agree to
36-26 any rate or amount of time price differential not exceeding a rate
36-27 or amount authorized by Chapter 1D [Article 1.04] of this Title.
36-28 SECTION 18. Article 7.11(1), Title 79, Revised Statutes
36-29 (Article 5069-7.11, Vernon's Texas Civil Statutes), is amended to
36-30 read as follows:
36-31 (1) Each holder governed by this chapter who is not a credit
36-32 union or an authorized lender under Chapter 3A [3] of this title
36-33 shall register with the Office of Consumer Credit Commissioner.
36-34 Each holder shall pay an annual fee of $25 for each location at
36-35 which credit transactions subject to this chapter are originated,
36-36 serviced, or collected. The commissioner by rule may establish
36-37 procedures to facilitate the registration and collection of fees,
36-38 including rules staggering the due dates of the fees throughout the
36-39 year. If a holder or seller fails to renew the holder's or
36-40 seller's registration, the commissioner shall, not later than 30
36-41 days after the expiration of the registration, notify the holder or
36-42 seller of the expiration, and of the procedures applicable to
36-43 renewal. A registration renewal is timely if filed with the
36-44 commissioner, together with the annual registration fee, not later
36-45 than 30 days after receipt of notice of expiration. A holder or
36-46 seller who fails to renew timely as required by this section is
36-47 subject to the penalties set forth in Section (2) of this Article.
36-48 SECTION 19. Article 8.01(i), Title 79, Revised Statutes
36-49 (Article 5069-8.01, Vernon's Texas Civil Statutes), is amended to
36-50 read as follows:
36-51 (i) Any person who has or obtains a registration or license
36-52 required by this Title, which registration or license was obtained
36-53 at any time after the date on which the registration or license was
36-54 required, may pay to the Consumer Credit Commissioner all
36-55 registration or license fees that should have been paid pursuant to
36-56 this Title for any and all prior years, plus a late filing fee
36-57 pursuant to this section. In the case of a person who has or
36-58 obtains a registration, the late filing fee shall be $250 except
36-59 that, if the person renews a registration within 30 days after the
36-60 due date, there shall be no penalty. If a person pays the required
36-61 registration fees for the prior periods and the late filing fee,
36-62 the person shall be deemed for all purposes to have had the
36-63 required registration for the periods for which the registration
36-64 fees have been paid. In the case of a person who has or obtains a
36-65 license, the late filing fee shall be $10,000 except that if the
36-66 person previously had a license and the prior license was in good
36-67 standing at the time of its expiration, and the person renews such
36-68 license within 180 days of its expiration, the late filing fee
36-69 shall be $1,000. If a person renews an expired license by payment
37-1 of the license and late filing fees, the person shall be deemed for
37-2 all purposes to have held the required license as if it had not
37-3 expired. If a person has or obtains a license and pays the
37-4 required license fees for prior periods and the late filing fee,
37-5 the person shall be deemed for all purposes to have had the
37-6 required license for such periods but only as to loans as to which
37-7 the person has not contracted for, charged, or received interest in
37-8 excess of that which would be allowed under Chapter 1D [Article
37-9 1.04(a) as modified by Article 1.04(b)] of this Title. A person
37-10 who is deemed to have had a registration or license pursuant to
37-11 this section shall not be subject to any liability, forfeiture, or
37-12 penalty under this Title or other law, other than as set forth in
37-13 this section, resulting from or relating to the fact that the
37-14 person did not have the registration or license at or during the
37-15 earlier periods for which the required registration or license fees
37-16 and late filing fee, as provided in this section, have since been
37-17 paid. The acquisition of the registration or license and payment
37-18 of the filing fees and late filing fee by a person shall also inure
37-19 to the benefit of that person's employees, agents, employers,
37-20 representatives, predecessors, successors, and assigns but not to
37-21 the benefit of any other person who should have been licensed under
37-22 this Title.
37-23 SECTION 20. Article 8.03, Title 79, Revised Statutes
37-24 (Article 5069-8.03, Vernon's Texas Civil Statutes), is amended to
37-25 read as follows:
37-26 Art. 8.03. In addition to the foregoing penalties, if
37-27 applicable, any person engaging in any business under the scope of
37-28 Chapter 3A [Chapter 3, 4, 5,] or 15 of this Title without first
37-29 securing a license provided, or without the authorization
37-30 prescribed, in such Chapter shall be guilty of a misdemeanor and
37-31 upon conviction thereof shall be punishable by a fine of not more
37-32 than One Thousand Dollars, and each such loan made without the
37-33 authority granted by such license shall constitute a separate
37-34 offense punishable hereunder; and in addition such person shall
37-35 forfeit all principal and charges contracted for or collected on
37-36 each such loan, and shall pay reasonable attorneys' fees incurred
37-37 by the obligor.
37-38 SECTION 21. Article 15.01(i), Title 79, Revised Statutes
37-39 (Article 5069-15.01, Vernon's Texas Civil Statutes), is amended to
37-40 read as follows:
37-41 (i) "Licensee" means the holder of a license issued
37-42 pursuant to Chapter 3A [3 of Subtitle 2] of this Title 79.
37-43 SECTION 22. Articles 15.02(d) and (e), Title 79, Revised
37-44 Statutes (Article 5069-15.02, Vernon's Texas Civil Statutes), are
37-45 amended to read as follows:
37-46 (d) Notwithstanding Chapter 1D [Article 1.04] of this Title
37-47 or any other provision of law, on any open-end account authorized
37-48 under Article 3A.805 [3.15(4), 4.01(4)], 15.01(k), or 15.01(l) of
37-49 this Title, pursuant to which credit card transactions [as defined
37-50 in Article 1.01(g) of this Title] may be made or in connection with
37-51 which account a merchant discount [as defined in Article 1.01(h) of
37-52 this Title] is imposed or received by the creditor, the rate of
37-53 interest from time to time in effect on such account is subject to
37-54 and may not exceed the quarterly ceiling from time to time in
37-55 effect as computed pursuant to Chapter 1D [Article 1.04] of this
37-56 Title and as further limited by this section, and the ceiling on
37-57 such account is subject to quarterly adjustment, which adjustment
37-58 shall be made at the option of the creditor either on the quarterly
37-59 calendar dates set out in Article 1D.008 [1.04(d)] of this Title or
37-60 on the first day of the first billing cycle of an account
37-61 immediately following said quarterly calendar dates. If a
37-62 computation of the quarterly ceiling under Chapter 1D [Article
37-63 1.04(a)(2)] of this Title is more than 22 percent per annum, the
37-64 ceiling under this provision shall be 22 percent per annum. If the
37-65 computation of the quarterly ceiling under Chapter 1D [Article
37-66 1.04(a)(2)] of this Title is less than 14 percent per annum, the
37-67 ceiling under this provision shall be 14 percent per annum.
37-68 Notwithstanding any other provision of this Title, a creditor
37-69 charging a rate limited by this section shall not be required to
38-1 disclose any decreases which may from time to time occur in the
38-2 rate on its account.
38-3 (e) Except as provided in Section (d) of this Article, as an
38-4 alternative to the rates authorized by Section (a) of this Article,
38-5 the parties may agree to any rate not exceeding a rate authorized
38-6 by Chapter 1D [Article 1.04] of this Title.
38-7 SECTION 23. Article 15.07, Title 79, Revised Statutes
38-8 (Article 5069-15.07, Vernon's Texas Civil Statutes), is amended to
38-9 read as follows:
38-10 Art. 15.07. COLLATERAL AND INSURANCE. Creditors may require
38-11 and take in connection with an account only such insurance and
38-12 collateral as are allowed under Chapter 3A [4 of Subtitle 2] of
38-13 this Title 79.
38-14 SECTION 24. Article 24.03(g), Insurance Code, is amended to
38-15 read as follows:
38-16 (g) Any person holding a license under Chapter 3A [3], Title
38-17 79, Revised [Civil] Statutes [of Texas, 1925, as amended (Article
38-18 5069-3.01 et seq., Vernon's Texas Civil Statutes)], on the
38-19 effective date of this chapter is required only to pay the license
38-20 fee required under this article and is not required to pay the
38-21 investigation fee required by Section (a) of this article.
38-22 SECTION 25. Article 24.11(h), Insurance Code, is amended to
38-23 read as follows:
38-24 (h) Those additions may be accomplished by a memorandum of
38-25 agreement between the agent and the insured, if before the first
38-26 scheduled payment date of the amended transaction the premium
38-27 finance company gives to the insured the following information in
38-28 writing:
38-29 (1) the amount of the premium increase;
38-30 (2) the down payment on increase;
38-31 (3) the principal amount of increase;
38-32 (4) the total amount of finance charge on increase;
38-33 (5) the total of additional balance due;
38-34 (6) the outstanding balance of original agreement;
38-35 (7) the consolidated agreement balance;
38-36 (8) the annual percentage rate of finance charge on
38-37 additional balance due;
38-38 (9) the revised schedule of payments;
38-39 (10) the amount or method of computing the amount of
38-40 any default, deferment, or similar charges authorized in Chapter 3A
38-41 [3], Title 79, Revised [Civil] Statutes [of Texas, 1925, as amended
38-42 (Article 5069-3.01 et seq., Vernon's Texas Civil Statutes)],
38-43 payable in the event of late payments; and
38-44 (11) identification of the method of computing any
38-45 unearned portion of the finance charge in the event of prepayment
38-46 of the obligation.
38-47 SECTION 26. Article 24.15, Insurance Code, is amended to
38-48 read as follows:
38-49 Art. 24.15. SERVICES CHARGES; LIMITATION OF CHARGES;
38-50 COMPUTATION. A premium finance company may not take or receive
38-51 from an insured a greater rate or charge than is provided by
38-52 Chapter 3A [Chapters 3 and 4], Title 79, Revised [Civil] Statutes
38-53 [of Texas, 1925, as amended (Article 5069-3.01 et seq. and Article
38-54 5069-4.01 et seq., Vernon's Texas Civil Statutes)]. Those charges
38-55 begin on the date from which the insurance company requires payment
38-56 of the premium and payment was made to the insurance company for
38-57 the financed policy or on the effective date of the policy,
38-58 whichever is earlier. The finance charge shall be computed on the
38-59 balance of the premiums due after subtracting the down payment made
38-60 by the insured in accordance with the premium finance agreement.
38-61 On insurance premium finance agreements made under this chapter, no
38-62 insurance charges or any other charge or fee, except those
38-63 authorized by this chapter, are permitted.
38-64 SECTION 27. Article 24.16, Insurance Code, is amended to
38-65 read as follows:
38-66 Art. 24.16. PREPAYMENT; REFUND. Notwithstanding the
38-67 provisions of any premium finance agreement to the contrary, any
38-68 insured may pay it in full at any time before the maturity of the
38-69 final installment of the balance of the agreement, and if the
39-1 insured does so and the agreement included an amount for a charge,
39-2 the insured shall receive for the prepayment either by cash or by
39-3 renewal a refund credit in accordance with the provisions for
39-4 refunds contained in Subchapter H, Chapter 3A [Section (6), Article
39-5 3.15], Title 79, Revised [Civil] Statutes [of Texas, 1925, as
39-6 amended (Article 5069-3.15, Vernon's Texas Civil Statutes)], and
39-7 the regulations issued under that article. Where the amount of the
39-8 credit for anticipation of payments is less than $1, no refund need
39-9 be made.
39-10 SECTION 28. Article 24.17(a), Insurance Code, is amended to
39-11 read as follows:
39-12 (a) A premium finance agreement may provide for the payment
39-13 of a default charge by the insured as provided in Article 3A.303
39-14 [Section (5), Article 3.15], Title 79, Revised [Civil] Statutes [of
39-15 Texas, 1925, as amended (Article 5069-3.15, Vernon's Texas Civil
39-16 Statutes)], the Insurance Code, and the regulations issued under
39-17 those statutes.
39-18 SECTION 29. Article 24.20, Insurance Code, is amended to
39-19 read as follows:
39-20 Art. 24.20. AUTHORITY OF LICENSED LOCAL RECORDING AGENTS TO
39-21 CHARGE INTEREST TO CERTAIN PURCHASERS OF INSURANCE.
39-22 Notwithstanding any other provision of law, any person,
39-23 partnership, or corporation duly licensed as a local recording
39-24 agent under Article 21.14, Insurance Code, as amended, may enter
39-25 into or establish a written agreement with any purchaser of
39-26 insurance from the agent providing for the payment of interest to
39-27 the agent in an amount not to exceed the greater of a rate allowed
39-28 by Chapter 1D [Article 1.04], Title 79, Revised Statutes [(Article
39-29 5069-1.04, Vernon's Texas Civil Statutes)], or the rate of one
39-30 percent a month, on any amount due and owing to the agent for
39-31 insurance purchased by the purchaser. In those instances the claim
39-32 or defense of usury is prohibited.
39-33 SECTION 30. Article 21.79E, Insurance Code, as added by
39-34 Chapter 242, Acts of the 72nd Legislature, Regular Session, 1991,
39-35 is amended to read as follows:
39-36 Art. 21.79E. CREDIT INVOLUNTARY UNEMPLOYMENT INSURANCE.
39-37 [(a)] Any insurer authorized to write any form of casualty
39-38 insurance in this state shall also be authorized to write group or
39-39 individual credit involuntary unemployment insurance indemnifying a
39-40 debtor for installment or other periodic payments on the
39-41 indebtedness while the debtor is involuntarily unemployed,
39-42 including policy forms and endorsements which define involuntary
39-43 unemployment to provide coverage and a premium charge for
39-44 interruption or reduction of a debtor's income during periods of
39-45 leave (paid or otherwise) authorized by the Federal Family and
39-46 Medical Leave Act, or other state or federal laws. Such insurance
39-47 may be written alone or in conjunction with credit life insurance,
39-48 credit accident and health insurance, or both, in policies issued
39-49 by any authorized insurer, but not in contravention of the Texas
39-50 Free Enterprise and Antitrust Act of 1983. Rates and forms for
39-51 such insurance may be made and filed in accordance with Articles
39-52 5.14 and 5.15 of this code.
39-53 SECTION 31. Section 26.02(a)(2), Business & Commerce Code,
39-54 is amended to read as follows:
39-55 (2) "Loan agreement" means one or more promises,
39-56 promissory notes, agreements, undertakings, security agreements,
39-57 deeds of trust or other documents, or commitments, or any
39-58 combination of those actions or documents, pursuant to which a
39-59 financial institution loans or delays repayment of or agrees to
39-60 loan or delay repayment of money, goods, or another thing of value
39-61 or to otherwise extend credit or make a financial accommodation.
39-62 The term does not include a promise, promissory note, agreement,
39-63 undertaking, document, or commitment relating to:
39-64 (A) a credit card or charge card; or
39-65 (B) an open-end account, as that term is defined
39-66 by Article 1B.002 [1.01], Title 79, Revised Statutes [(Article
39-67 5069-1.01, Vernon's Texas Civil Statutes)], intended or used
39-68 primarily for personal, family, or household use.
39-69 SECTION 32. Section 242.098(b), Health and Safety Code, is
40-1 amended to read as follows:
40-2 (b) Interest on unreimbursed amounts begins to accrue on the
40-3 date on which the funds were disbursed to the home. The rate of
40-4 interest is the rate determined under Article 1E.003, [Section 2,
40-5 Article 1.05,] Title 79, Revised Statutes [(Article 5069-1.05,
40-6 Vernon's Texas Civil Statutes)], to be applicable to judgments
40-7 rendered during the month in which the money was disbursed to the
40-8 home.
40-9 SECTION 33. Section 143.1215(c), Local Government Code, is
40-10 amended to read as follows:
40-11 (c) Interest under Subsection (b) accrues beginning on the
40-12 date of the fire fighter's or police officer's reinstatement at a
40-13 rate equal to three percent plus the rate for court judgments under
40-14 Chapter 1E [Article 1.05], Title 79, Revised Statutes [(Article
40-15 5069-1.05, Vernon's Texas Civil Statutes)], that is in effect on
40-16 the date of the person's reinstatement.
40-17 SECTION 34. Section 395.025(d), Local Government Code, is
40-18 amended to read as follows:
40-19 (d) Any refund shall bear interest calculated from the date
40-20 of collection to the date of refund at the statutory rate as set
40-21 forth in Article 1C.002 [1.03], Title 79, Revised Statutes
40-22 [(Article 5069-1.03, Vernon's Texas Civil Statutes)], or its
40-23 successor statute.
40-24 SECTION 35. Section 32.35(a)(5), Penal Code, is amended to
40-25 read as follows:
40-26 (5) "Creditor" means a person licensed under Chapter
40-27 3A [3], Subtitle 2, Title 79, Revised Statutes [(Article 5069-3.01
40-28 et seq., Vernon's Texas Civil Statutes)], a bank, savings and loan
40-29 association, credit union, or other regulated financial institution
40-30 that lends money or otherwise extends credit to a cardholder
40-31 through a credit card and that authorizes other persons to honor
40-32 the credit card.
40-33 SECTION 36. Section 32.065(d), Tax Code, is amended to read
40-34 as follows:
40-35 (d) Chapters 3A [5] and 15 and Article 1C.102 [and Sections
40-36 1.07(d)(1) and (f)], Title 79, Revised Statutes [(Article 5069-1.01
40-37 et seq., Vernon's Texas Civil Statutes)], do not apply to a
40-38 transaction covered by this section. The transferee of a tax lien
40-39 under this section is not required to obtain a license under Title
40-40 79, Revised Statutes (Article 5069-1.01 et seq., Vernon's Texas
40-41 Civil Statutes).
40-42 SECTION 37. Section 35-1, The Securities Act (Article
40-43 581-35-1, Vernon's Texas Civil Statutes), is amended to read as
40-44 follows:
40-45 Sec. 35-1. FEES FOR SALES OF EXCESS SECURITIES. A. An
40-46 offeror who sells securities in this State in excess of the
40-47 aggregate amount of securities registered for the offering may
40-48 apply to register the excess securities by paying three times the
40-49 difference between the initial fee paid and the fee required under
40-50 Subsection E of Section 35, plus, if the registration is no longer
40-51 in effect, interest on that amount computed at the rate provided by
40-52 Article 1C.002 [1.03], Title 79, Revised Statutes [(Article
40-53 5069-1.03, Vernon's Texas Civil Statutes)], from the date the
40-54 registration was no longer in effect until the date the subsequent
40-55 application is filed, for the securities sold to persons within
40-56 this State, plus the amendment fee prescribed by Subsection D of
40-57 Section 35. Registration of the excess securities, if granted,
40-58 shall be effective retroactively to the effective date of the
40-59 initial registration for the offering.
40-60 B. An offeror who has filed a notice to claim a limited
40-61 offering exemption, who paid less than the maximum fee prescribed
40-62 in Subsection J of Section 35, and who offered a greater amount of
40-63 securities in the offering than authorized pursuant to the formula
40-64 prescribed in Subsection J of Section 35, may file an amended
40-65 notice disclosing the amount of securities offered and paying three
40-66 times the difference between the fee initially paid and the fee
40-67 which should have been paid, plus interest on that amount computed
40-68 at the rate provided by Article 1C.002 [1.03], Title 79, Revised
40-69 Statutes [(Article 5069-1.03, Vernon's Texas Civil Statutes)], from
41-1 the date the original notice was received by the Commissioner until
41-2 the date the amended notice is received by the Commissioner. The
41-3 amended notice shall be retroactive to the date of the initial
41-4 filing.
41-5 SECTION 38. Section 35-2, The Securities Act (Article
41-6 581-35-2, Vernon's Texas Civil Statutes), is amended to read as
41-7 follows:
41-8 Sec. 35-2. FEES FOR SALES OF UNREGISTERED SECURITIES. If,
41-9 after notice and hearing, the commissioner or any court of
41-10 competent jurisdiction finds that an offeror has sold securities in
41-11 this State pursuant to an offering no part of which has been
41-12 registered under Section 7 or 10 of this Act and for which the
41-13 transactions or securities are not exempt under Section 5 or 6 of
41-14 this Act, the commissioner or said court may impose a fee equal to
41-15 six times the amount that would have been paid if the issuer had
41-16 filed an application to register the securities and paid the fee
41-17 prescribed by Subsection E of Section 35 based on the aggregate
41-18 amount of sales made in this State within the prior three years,
41-19 plus interest on that amount at the rate provided by Article 1C.002
41-20 [1.03], Title 79, Revised Statutes [(Article 5069-1.03, Vernon's
41-21 Texas Civil Statutes)], from the date of the first such sale made
41-22 in this State until the date the fee is paid. The payment of the
41-23 fee prescribed by this Section does not effect registration of the
41-24 securities or affect the application of any other Section of this
41-25 Act. The payment of the fee prescribed by this Section is not an
41-26 admission that the transactions or securities were not exempt and
41-27 is not admissible as evidence in a suit or proceeding for failure
41-28 to register the securities.
41-29 SECTION 39. Article 2.09A, Texas Miscellaneous Corporation
41-30 Laws Act (Article 1302-2.09A, Vernon's Texas Civil Statutes), is
41-31 amended to read as follows:
41-32 Art. 2.09A. ALTERNATIVE RATE. Notwithstanding the
41-33 provisions of Article 2.09 of this Act, any corporation, domestic
41-34 or foreign, including but not limited to any charitable or
41-35 religious corporation, may agree to and stipulate for any rate of
41-36 interest that does not exceed a rate authorized by Chapter 1D
41-37 [Article 1.04], Title 79, Revised [Civil] Statutes [of Texas, 1925,
41-38 as amended (Article 5069-1.04, Vernon's Texas Civil Statutes)].
41-39 SECTION 40. Section 7.01, Texas Credit Union Act (Article
41-40 2461-7.01, Vernon's Texas Civil Statutes), is amended to read as
41-41 follows:
41-42 Sec. 7.01. PURPOSE, TERMS, AND INTEREST RATE. If made in
41-43 accordance with rules adopted by the commission, a credit union may
41-44 make loans to members for such purposes as it may approve and on
41-45 such security and terms as it may require, at rates of interest not
41-46 exceeding one and one-half percent per month on the unpaid balance,
41-47 or higher rates otherwise authorized by law, including the rates
41-48 authorized by Chapter 1D [Article 1.04], Title 79, Revised Statutes
41-49 [(Article 5069-1.04, Vernon's Texas Civil Statutes)]. Chapter 15
41-50 and Subtitle 2, Title 79, Revised Statutes [(Article 5069-2.01 et
41-51 seq., Vernon's Texas Civil Statutes)], do not apply to a credit
41-52 union loan or extension of credit unless the agreement evidencing
41-53 that transaction specifically provides otherwise. Every loan must
41-54 be evidenced by a written instrument.
41-55 SECTION 41. Section 16.01, Medical Liability and Insurance
41-56 Improvement Act of Texas (Article 4590i, Vernon's Texas Civil
41-57 Statutes), is amended to read as follows:
41-58 Sec. 16.01. APPLICATION OF OTHER LAW. Notwithstanding
41-59 Articles 1E.101, 1E.102, and 1E.104-1E.108 [Sections 6(a)-(f),
41-60 Article 1.05], Title 79, Revised Statutes [(Article 5069-1.05,
41-61 Vernon's Texas Civil Statutes)], prejudgment interest in a health
41-62 care liability claim shall be awarded in accordance with this
41-63 subchapter.
41-64 SECTION 42. Section 16.02(c), Medical Liability and
41-65 Insurance Improvement Act of Texas (Article 4590i, Vernon's Texas
41-66 Civil Statutes), is amended to read as follows:
41-67 (c) Prejudgment interest allowed under this subchapter shall
41-68 be computed in accordance with Article 1E.103 [Section 6(g),
41-69 Article 1.05], Title 79, Revised Statutes [(Article 5069-1.05,
42-1 Vernon's Texas Civil Statutes)], for a period beginning on the date
42-2 of injury and ending on the date before the date the judgment is
42-3 signed.
42-4 SECTION 43. Section 1.04(c), Texas Revised Partnership Act
42-5 (Article 6132b-1.04, Vernon's Texas Civil Statutes), is amended to
42-6 read as follows:
42-7 (c) Interest Rate. If an obligation to pay interest arises
42-8 under this Act and the rate is not specified, the rate is the rate
42-9 specified by Article 1C.002 [1.03], Title 79, Revised Statutes
42-10 [(Article 5069-1.03, Vernon's Texas Civil Statutes), and its
42-11 subsequent amendments], or a successor statute.
42-12 SECTION 44. Section 1(a), Chapter 617, Acts of the 68th
42-13 Legislature, Regular Session, 1983 (Article 9022, Vernon's Texas
42-14 Civil Statutes), is amended to read as follows:
42-15 (a) The holder of a check or its assignee, agent,
42-16 representative, or any other person retained by the holder to seek
42-17 collection of the face value of the dishonored check on return of
42-18 the check to the holder following its dishonor by a payor may
42-19 charge the drawer or endorser a reasonable processing fee, which
42-20 shall not exceed $25. A person may not charge a processing fee to a
42-21 drawer or endorser under this subsection if the fee has been
42-22 collected under Article 102.007(e) or Article 102.0071, Code of
42-23 Criminal Procedure. If a processing fee has been collected under
42-24 this subsection and the holder subsequently receives a fee
42-25 collected under Article 102.007(e) or Article 102.0071, Code of
42-26 Criminal Procedure, the holder shall immediately refund the fee
42-27 previously collected from the drawer or endorser. Notwithstanding
42-28 any other provisions of law, a loan agreement made under Chapter 3A
42-29 [3 or 4], Title 79, Revised Statutes [(Article 5069-1.01 et seq.,
42-30 Vernon's Texas Civil Statutes)], may provide that on return of a
42-31 dishonored check given in payment under the agreement, the holder
42-32 may charge the obligor under the agreement the processing fee
42-33 authorized by this Act, and the fee may be added to the unpaid
42-34 balance owed under the agreement, except that interest may not be
42-35 charged on the fee during the term of the agreement.
42-36 SECTION 45. Chapters 1, 1A, 3, 4, and 5, Title 79, Revised
42-37 Statutes, are repealed.
42-38 SECTION 46. (a) The change in law made by this Act applies
42-39 only to an act committed or a transaction that occurs on or after
42-40 the effective date of this Act.
42-41 (b) An act committed or a transaction that occurs before the
42-42 effective date of this Act is covered by the law in effect when the
42-43 act was committed or the transaction occurred, and the former law
42-44 is continued in effect for that purpose.
42-45 SECTION 47. (a) If this Act conflicts with another Act of
42-46 the 75th Legislature, Regular Session, 1997:
42-47 (1) the change in law made in the other Act prevails
42-48 and the substance of the change is given effect as part of this Act
42-49 unless:
42-50 (A) this Act or the conflicting Act expressly
42-51 provides otherwise; or
42-52 (B) it is not possible to give the conflicting
42-53 law effect within the context of this Act, in which event this Act
42-54 prevails; and
42-55 (2) the text of a law that is reenacted in the other
42-56 Act only because of the constitutional requirement that the amended
42-57 law be reenacted at length is superseded by this Act.
42-58 (b) If this Act and another Act of the 75th Legislature,
42-59 Regular Session, 1997, make the same substantive change from the
42-60 current law, but differ in text, this Act prevails regardless of
42-61 the relative dates of enactment.
42-62 SECTION 48. This Act takes effect September 1, 1997.
42-63 SECTION 49. The importance of this legislation and the
42-64 crowded condition of the calendars in both houses create an
42-65 emergency and an imperative public necessity that the
42-66 constitutional rule requiring bills to be read on three several
42-67 days in each house be suspended, and this rule is hereby suspended.
42-68 * * * * *