By: Carona S.B. No. 251 A BILL TO BE ENTITLED AN ACT 1-1 relating to certain charges for the administration of loans and 1-2 loan applications. 1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-4 SECTION 1. Section (8), Article 3.15, Title 79, Revised 1-5 Statutes (Article 5069-3.15, Vernon's Texas Civil Statutes), is 1-6 amended to read as follows: 1-7 (8) In addition to the authorized charges provided in this 1-8 chapter no further or other charge or amount whatsoever shall be 1-9 directly, or indirectly, charged, contracted for, or received. 1-10 This includes (but is not limited by) all charges such as fees, 1-11 compensation, bonuses, commissions, brokerage, discounts, expenses 1-12 and every other charge of any nature whatsoever, whether of the 1-13 types listed herein or not. Without limitation of the foregoing, 1-14 such charges may be any form of costs or compensation whether 1-15 contracted for or not, received by the lender, or any other person, 1-16 in connection with (a) the investigating, arranging, negotiation, 1-17 procuring, guaranteeing, making, servicing, collecting or enforcing 1-18 of a loan; or (b) for the forbearance of money, credit, goods or 1-19 things in action; or (c) for any other service or services 1-20 performed or offered. However, the prohibition set out herein 1-21 shall not apply to amounts actually incurred by an authorized 1-22 lender as court costs; attorney fees assessed by a court; lawful 1-23 fees for filing, recording, or releasing in any public office any 2-1 security for a loan; the reasonable cost actually expended for 2-2 repossessing, storing, preparing for sale, or selling any security; 2-3 or fees for noting a lien on or transferring a certificate of title 2-4 to any motor vehicle offered as security for a loan made under this 2-5 Chapter, or premiums or identifiable charge received in connection 2-6 with the sale of insurance authorized under this Chapter; or, on a 2-7 loan made under this Chapter, an administrative fee not to exceed 2-8 $25 for a loan of more than $1,000 or $10 for a loan of $1,000 or 2-9 less which is considered earned at the time the loan is made or 2-10 refinanced, which is not subject to refund, which may not be 2-11 contracted for or received by the lender refinancing the loan more 2-12 than once in any 180-day period if the loan is refinanced, and for 2-13 which 50 cents of the fee charged is deposited with the comptroller 2-14 for the purpose of fulfilling the responsibilities of the Finance 2-15 Commission as required under Section 1.011(f), Texas Banking Act 2-16 (Article 342-1.011, Vernon's Texas Civil Statutes). 2-17 SECTION 2. Section (7), Article 4.01, Title 79, Revised 2-18 Statutes (Article 5069-4.01, Vernon's Texas Civil Statutes), is 2-19 amended to read as follows: 2-20 (7) In addition to the authorized charges provided in this 2-21 Chapter no further or other charge or amount whatsoever shall be 2-22 directly, or indirectly, charged, contracted for, or received. 2-23 This includes (but is not limited by) all charges such as fees, 2-24 compensation, bonuses, commissions, brokerage, discounts, expenses 2-25 and every other charge of any nature whatsoever, whether of the 3-1 types listed herein or not. Without limitation of the foregoing, 3-2 such charges may be any form of costs or compensation whether 3-3 contracted for or not, received by the lender, or any other person, 3-4 in connection with (a) the investigating, arranging, negotiation, 3-5 procuring, guaranteeing, making, servicing, collecting or enforcing 3-6 of a loan; or (b) for the forbearance of money, credit, goods or 3-7 things in action; or (c) for any other service or services 3-8 performed or offered. However, the prohibition set out herein 3-9 shall not apply to amounts actually incurred by a lender as court 3-10 costs, attorney fees assessed by a court, lawful fees for filing, 3-11 recording, or releasing to any public office any instrument 3-12 securing a loan; the reasonable cost actually expended for 3-13 repossessing, storing, preparing for sale, or selling any security; 3-14 or fees for noting a lien on or transferring a certificate of title 3-15 to any motor vehicle offered as security for a loan made under this 3-16 Chapter, or premiums or identifiable charge received in connection 3-17 with the sale of insurance authorized under this Chapter; or an 3-18 administrative fee not to exceed $25 for a loan of more than $1,000 3-19 or $10 for a loan of $1,000 or less which is considered earned at 3-20 the time the loan is made or refinanced, which is not subject to 3-21 refund, which may not be contracted for or received by the lender 3-22 refinancing the loan more than once in any 180-day period if the 3-23 loan is refinanced, and for which 50 cents of the fee charged is 3-24 deposited with the comptroller for the purpose of fulfilling the 3-25 responsibilities of the Finance Commission as required under 4-1 Section 1.011(f), Texas Banking Act (Article 342-1.011, Vernon's 4-2 Texas Civil Statutes). 4-3 SECTION 3. Section (7), Article 5.02, Title 79, Revised 4-4 Statutes (Article 5069-5.02, Vernon's Texas Civil Statutes), is 4-5 amended to read as follows: 4-6 (7) In addition to the authorized charges provided in the 4-7 Chapter no further or other charge or amount whatsoever shall be 4-8 directly, or indirectly, charged, contracted for, or received. 4-9 This includes (but is not limited by) all charges such as fees, 4-10 compensation, bonuses, commissions, brokerage, discounts, expenses 4-11 and every other charge of any nature whatsoever, whether of the 4-12 types listed herein or not. Without limitation of the foregoing, 4-13 such charges may be any form of costs or compensation whether 4-14 contracted for or not, received by the lender, or any other person, 4-15 in connection with (a) the investigating, arranging, negotiation, 4-16 procuring, guaranteeing, making, servicing, collecting or enforcing 4-17 a loan; or (b) for the forbearance of money, credit, goods or 4-18 things in action; or (c) for any other service or services 4-19 performed or offered. A secondary mortgage loan lender or an 4-20 assignee of a secondary mortgage loan may collect on or before the 4-21 closing of a loan, or include in the principal of the secondary 4-22 mortgage loan, the following: 4-23 (A) reasonable fees for title examination and 4-24 preparation of an abstract of title by an attorney not an employee 4-25 of the lender, or a title company or property search company 5-1 authorized to do business in this State; or premiums or fees for 5-2 title insurance or title search for the benefit of the mortgagee, 5-3 and, at mortgagor's option, title insurance or title search for the 5-4 benefit of the mortgagor; 5-5 (B) reasonable fees charged to the lender by an 5-6 attorney, provided the attorney is not a salaried employee of the 5-7 lender, for preparation of the loan documents in connection with 5-8 the mortgage loan, if the fees are evidenced by a statement for 5-9 services rendered addressed to the lender; 5-10 (C) charges prescribed by law that are or will be paid 5-11 to public officials for determining the existence of and for 5-12 perfecting, releasing, and satisfying a security interest; 5-13 (D) reasonable fees for an appraisal of real property 5-14 offered as security for the loan prepared by a certified appraiser 5-15 who is not an employee of the lender; 5-16 (E) reasonable cost of any credit report; 5-17 (F) reasonable fees for a survey of real property 5-18 offered as security for the loan prepared by a registered surveyor 5-19 who is not a salaried employee of the lender; 5-20 (G) the premiums received in connection with the sale 5-21 of credit life insurance, credit accident and health insurance, and 5-22 insurance which protects the mortgagee in the event of default by 5-23 the mortgagor, the benefits of which go in whole or in part to 5-24 reduce or extinguish the loan balance. Premiums for property 5-25 insurance written in conformity with Section (2) of Article 5.03 of 6-1 this Title may be added to the loan contract; and 6-2 (H) reasonable fees relating to real property offered 6-3 as security for the loan that are incurred to comply with a 6-4 federally mandated program if the collection of the fees or the 6-5 participation in the program is required by a federal agency. 6-6 In addition, the contract for a secondary mortgage loan may 6-7 provide for: 6-8 (A) reasonable fees or charges paid to the trustee in 6-9 connection with a deed of trust or similar instrument executed in 6-10 connection with the secondary mortgage loan, including but not 6-11 limited to fees for enforcing the lien, posting for sale, selling, 6-12 or releasing the property secured by the deed of trust; 6-13 (B) reasonable fees paid to an attorney who is not an 6-14 employee of the creditor in the collection of a delinquent 6-15 secondary mortgage loan and any court costs and fees incurred in 6-16 the collection of, or foreclosure of, any lien created by the loan; 6-17 (C) a fee of Fifteen Dollars or less for the return by 6-18 a depository institution of a dishonored check, negotiable order of 6-19 withdrawal, or share draft offered in full or partial payment of a 6-20 secondary mortgage loan; 6-21 (D) an administrative fee not to exceed $25 for a loan 6-22 of more than $1,000 or $10 for a loan of $1,000 or less which is 6-23 considered earned at the time the loan is made or refinanced, which 6-24 is not subject to refund, which may not be contracted for or 6-25 received by the lender refinancing the loan more than once in any 7-1 180-day period if the loan is refinanced, and for which 50 cents of 7-2 the fee charged is deposited with the comptroller for the purpose 7-3 of fulfilling the responsibilities of the Finance Commission as 7-4 required under Section 1.011(f), Texas Banking Act (Article 7-5 342-1.011, Vernon's Texas Civil Statutes). 7-6 SECTION 4. This Act takes effect September 1, 1997. 7-7 SECTION 5. The importance of this legislation and the 7-8 crowded condition of the calendars in both houses create an 7-9 emergency and an imperative public necessity that the 7-10 constitutional rule requiring bills to be read on three several 7-11 days in each house be suspended, and this rule is hereby suspended.