1-1     By:  Carona                                            S.B. No. 251

 1-2           (In the Senate - Filed January 21, 1997; January 22, 1997,

 1-3     read first time and referred to Committee on Economic Development;

 1-4     March 19, 1997, reported adversely, with favorable Committee

 1-5     Substitute by the following vote:  Yeas 10, Nays 0; March 19, 1997,

 1-6     sent to printer.)

 1-7     COMMITTEE SUBSTITUTE FOR S.B. No. 251                    By:  Ellis

 1-8                            A BILL TO BE ENTITLED

 1-9                                   AN ACT

1-10     relating to certain charges for the administration of loans and

1-11     loan applications.

1-12           BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

1-13           SECTION 1.  Section (8), Article 3.15, Title 79, Revised

1-14     Statutes (Article 5069-3.15, Vernon's Texas Civil Statutes), is

1-15     amended to read as follows:

1-16           (8)  In addition to the authorized charges provided in this

1-17     chapter no further or other charge or amount whatsoever shall be

1-18     directly, or indirectly, charged, contracted for, or received.

1-19     This includes (but is not limited by) all charges such as fees,

1-20     compensation, bonuses, commissions, brokerage, discounts, expenses

1-21     and every other charge of any nature whatsoever, whether of the

1-22     types listed herein or not.  Without limitation of the foregoing,

1-23     such charges may be any form of costs or compensation whether

1-24     contracted for or not, received by the lender, or any other person,

1-25     in connection with (a) the investigating, arranging, negotiation,

1-26     procuring, guaranteeing, making, servicing, collecting or enforcing

1-27     of a loan; or (b) for the forbearance of money, credit, goods or

1-28     things in action; or (c) for any other service or services

1-29     performed or offered.  However, the prohibition set out herein

1-30     shall not apply to amounts actually incurred by an authorized

1-31     lender as court costs; attorney fees assessed by a court; lawful

1-32     fees for filing, recording, or releasing in any public office any

1-33     security for a loan; the reasonable cost actually expended for

1-34     repossessing, storing, preparing for sale, or selling any security;

1-35     or fees for noting a lien on or transferring a certificate of title

1-36     to any motor vehicle offered as security for a loan made under this

1-37     Chapter, or premiums or identifiable charge received in connection

1-38     with the sale of insurance authorized under this Chapter; or, on a

1-39     loan made under this Chapter, an administrative fee not to exceed

1-40     $25 for a loan of more than $1,000 or $10 for a loan of $1,000 or

1-41     less which is considered earned at the time the loan is made or

1-42     refinanced, which is not subject to refund, which may not be

1-43     contracted for or received by the lender refinancing the loan more

1-44     than once in any 180-day period if the loan is refinanced, and for

1-45     which 50 cents of the fee charged is deposited with the comptroller

1-46     for the purpose of fulfilling the responsibilities of the Finance

1-47     Commission as required under Section 1.011(f), Texas Banking Act

1-48     (Article 342-1.011, Vernon's Texas Civil Statutes).

1-49           SECTION 2.  Section (7), Article 4.01, Title 79, Revised

1-50     Statutes (Article 5069-4.01, Vernon's Texas Civil Statutes), is

1-51     amended to read as follows:

1-52           (7)  In addition to the authorized charges provided in this

1-53     Chapter no further or other charge or amount whatsoever shall be

1-54     directly, or indirectly, charged, contracted for, or received.

1-55     This includes (but is not limited by) all charges such as fees,

1-56     compensation, bonuses, commissions, brokerage, discounts, expenses

1-57     and every other charge of any nature whatsoever, whether of the

1-58     types listed herein or not.  Without limitation of the foregoing,

1-59     such charges may be any form of costs or compensation whether

1-60     contracted for or not, received by the lender, or any other person,

1-61     in connection with (a) the investigating, arranging, negotiation,

1-62     procuring, guaranteeing, making, servicing, collecting or enforcing

1-63     of a loan; or (b) for the forbearance of money, credit, goods or

1-64     things in action; or (c) for any other service or services

 2-1     performed or offered.  However, the prohibition set out herein

 2-2     shall not apply to amounts actually incurred by a lender as court

 2-3     costs, attorney fees assessed by a court, lawful fees for filing,

 2-4     recording, or releasing to any public office any instrument

 2-5     securing a loan; the reasonable cost actually expended for

 2-6     repossessing, storing, preparing for sale, or selling any security;

 2-7     or fees for noting a lien on or transferring a certificate of title

 2-8     to any motor vehicle offered as security for a loan made under this

 2-9     Chapter, or premiums or identifiable charge received in connection

2-10     with the sale of insurance authorized under this Chapter; or an

2-11     administrative fee not to exceed $25 for a loan of more than $1,000

2-12     or $10 for a loan of $1,000 or less which is considered earned at

2-13     the time the loan is made or refinanced, which is not subject to

2-14     refund, which may not be contracted for or received by the lender

2-15     refinancing the loan more than once in any 180-day period if the

2-16     loan is refinanced, and for which 50 cents of the fee charged is

2-17     deposited with the comptroller for the purpose of fulfilling the

2-18     responsibilities of the Finance Commission as required under

2-19     Section 1.011(f), Texas Banking Act (Article 342-1.011, Vernon's

2-20     Texas Civil Statutes).

2-21           SECTION 3.  Section (7), Article 5.02, Title 79, Revised

2-22     Statutes (Article 5069-5.02, Vernon's Texas Civil Statutes), is

2-23     amended to read as follows:

2-24           (7)  In addition to the authorized charges provided in the

2-25     Chapter no further or other charge or amount whatsoever shall be

2-26     directly, or indirectly, charged, contracted for, or received.

2-27     This includes (but is not limited by) all charges such as fees,

2-28     compensation, bonuses, commissions, brokerage, discounts, expenses

2-29     and every other charge of any nature whatsoever, whether of the

2-30     types listed herein or not.  Without limitation of the foregoing,

2-31     such charges may be any form of costs or compensation whether

2-32     contracted for or not, received by the lender, or any other person,

2-33     in connection with (a) the investigating, arranging, negotiation,

2-34     procuring, guaranteeing, making, servicing, collecting or enforcing

2-35     a loan; or (b) for the forbearance of money, credit, goods or

2-36     things in action; or (c) for any other service or services

2-37     performed or offered.  A secondary mortgage loan lender or an

2-38     assignee of a secondary mortgage loan may collect on or before the

2-39     closing of a loan, or include in the principal of the secondary

2-40     mortgage loan, the following:

2-41                 (A)  reasonable fees for title examination and

2-42     preparation of an abstract of title by an attorney not an employee

2-43     of the lender, or a title company or property search company

2-44     authorized to do business in this State; or premiums or fees for

2-45     title insurance or title search for the benefit of the mortgagee,

2-46     and, at mortgagor's option, title insurance or title search for the

2-47     benefit of the mortgagor;

2-48                 (B)  reasonable fees charged to the lender by an

2-49     attorney, provided the attorney is not a salaried employee of the

2-50     lender, for preparation of the loan documents in connection with

2-51     the mortgage loan, if the fees are evidenced by a statement for

2-52     services rendered addressed to the lender;

2-53                 (C)  charges prescribed by law that are or will be paid

2-54     to public officials for determining the existence of and for

2-55     perfecting, releasing, and satisfying a security interest;

2-56                 (D)  reasonable fees for an appraisal of real property

2-57     offered as security for the loan prepared by a certified appraiser

2-58     who is not an employee of the lender;

2-59                 (E)  reasonable cost of any credit report;

2-60                 (F)  reasonable fees for a survey of real property

2-61     offered as security for the loan prepared by a registered surveyor

2-62     who is not a salaried employee of the lender;

2-63                 (G)  the premiums received in connection with the sale

2-64     of credit life insurance, credit accident and health insurance, and

2-65     insurance which protects the mortgagee in the event of default by

2-66     the mortgagor, the benefits of which go in whole or in part to

2-67     reduce or extinguish the loan balance.  Premiums for property

2-68     insurance written in conformity with Section (2) of Article 5.03 of

2-69     this Title may be added to the loan contract; and

 3-1                 (H)  reasonable fees relating to real property offered

 3-2     as security for the loan that are incurred to comply with a

 3-3     federally mandated program if the collection of the fees or the

 3-4     participation in the program is required by a federal agency.

 3-5           In addition, the contract for a secondary mortgage loan may

 3-6     provide for:

 3-7                 (A)  reasonable fees or charges paid to the trustee in

 3-8     connection with a deed of trust or similar instrument executed in

 3-9     connection with the secondary mortgage loan, including but not

3-10     limited to fees for enforcing the lien, posting for sale, selling,

3-11     or releasing the property secured by the deed of trust;

3-12                 (B)  reasonable fees paid to an attorney who is not an

3-13     employee of the creditor in the collection of a delinquent

3-14     secondary mortgage loan and any court costs and fees incurred in

3-15     the collection of, or foreclosure of, any lien created by the loan;

3-16                 (C)  a fee of Fifteen Dollars or less for the return by

3-17     a depository institution of a dishonored check, negotiable order of

3-18     withdrawal, or share draft offered in full or partial payment of a

3-19     secondary mortgage loan;

3-20                 (D)  an administrative fee not to exceed $25 for a loan

3-21     of more than $1,000 or $10 for a loan of $1,000 or less which is

3-22     considered earned at the time the loan is made or refinanced, which

3-23     is not subject to refund, which may not be contracted for or

3-24     received by the lender refinancing the loan more than once in any

3-25     180-day period if the loan is refinanced, and for which 50 cents of

3-26     the fee charged is deposited with the comptroller for the purpose

3-27     of fulfilling the responsibilities of the Finance Commission as

3-28     required under Section 1.011(f), Texas Banking Act (Article

3-29     342-1.011, Vernon's Texas Civil Statutes).

3-30           SECTION 4.  This Act takes effect September 1, 1997.

3-31           SECTION 5.  The importance of this legislation and the

3-32     crowded condition of the calendars in both houses create an

3-33     emergency and an imperative public necessity that the

3-34     constitutional rule requiring bills to be read on three several

3-35     days in each house be suspended, and this rule is hereby suspended.

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