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. 3-36 * * * * *