By Averitt H.B. No. 2180
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to usury and the regulation of lenders.
1-3 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-4 ARTICLE 1. AMENDMENTS TO TITLE 79, REVISED STATUTES
1-5 SECTION 1.01. Articles 1B.002(b) and (c), Title 79, Revised
1-6 Statutes (Article 5069-1B.002, Vernon's Texas Civil Statutes), are
1-7 amended to read as follows:
1-8 (b) [These definitions shall be liberally construed to
1-9 accomplish the purposes of this subtitle.]
1-10 [(c)] The finance commission by rule may adopt other
1-11 definitions to accomplish the purposes of this title [subtitle].
1-12 SECTION 1.02. Article 1C.102, Title 79, Revised Statutes
1-13 (Article 5069-1C.102, Vernon's Texas Civil Statutes), is amended to
1-14 read as follows:
1-15 Art. 1C.102. PROHIBITION ON PREPAYMENT [CHARGE OR] PENALTY.
1-16 If the interest rate on a loan for property that is or is to be the
1-17 residential homestead of the borrower is [made at an interest rate
1-18 that is] greater than a rate of 12 percent a year, a prepayment
1-19 [charge or] penalty may not be collected on the loan unless the
1-20 [charge or] penalty is required by an agency created by federal
1-21 law.
1-22 SECTION 1.03. Article 1D.003(c), Title 79, Revised Statutes
1-23 (Article 5069-1D.003, Vernon's Texas Civil Statutes), is amended to
1-24 read as follows:
2-1 (c) In this subchapter [article], "auction rate" means the
2-2 auction average rate quoted on a bank discount basis for 26-week
2-3 treasury bills issued by the United States government, as
2-4 published by the Federal Reserve Board, for the week preceding the
2-5 week in which the weekly rate ceiling is to take effect.
2-6 SECTION 1.04. Article 3A.001, Title 79, Revised Statutes
2-7 (Article 5069-3A.001, Vernon's Texas Civil Statutes), is amended to
2-8 read as follows:
2-9 Art. 3A.001. DEFINITIONS. In this chapter:
2-10 (1) "Irregular transaction" means a loan that is
2-11 payable:
2-12 (A) in installments that are not consecutive or
2-13 monthly;
2-14 (B) with installments that are not substantially
2-15 equal in amount; or
2-16 (C) with a first scheduled installment due that
2-17 is not within one month and 15 days after the date of the loan.
2-18 (2) "Regular transaction" means a loan that is
2-19 payable:
2-20 (A) in consecutive monthly installments;
2-21 (B) with installments substantially equal in
2-22 amount; and
2-23 (C) with a first scheduled installment due
2-24 within one month and 15 days after the date of the loan.
2-25 (3) "Regulated loan license" means a consumer loan
2-26 license.
2-27 (4) "Secondary mortgage loan" means a loan that is:
3-1 (A) secured in whole or in part by an interest,
3-2 including a lien or security interest, in real property that is:
3-3 (i) improved by a dwelling designed for
3-4 occupancy by four or fewer families; and
3-5 (ii) subject to one or more liens,
3-6 security interests, prior mortgages, or deeds of trust; and
3-7 (B) not to be repaid before the 91st day after
3-8 the date of the loan.
3-9 SECTION 1.05. Article 3A.002, Title 79, Revised Statutes
3-10 (Article 5069-3A.002, Vernon's Texas Civil Statutes), is amended to
3-11 read as follows:
3-12 Art. 3A.002. INTEREST COMPUTATION METHODS. (a) The
3-13 scheduled installment earnings method is a method to compute an
3-14 interest charge by applying a daily rate to the unpaid balance of
3-15 the principal amount [financed] as if all payments will be made
3-16 upon the scheduled installment date. The daily rate is 1/365th of
3-17 the equivalent contract rate. Payments received before or after
3-18 the due date do not cause an adjustment in the amount of the
3-19 scheduled principal reduction.
3-20 (b) The true daily earnings method is a method to compute an
3-21 interest charge by applying a daily rate to the unpaid balance of
3-22 the principal amount [financed]. The daily rate is 1/365th of the
3-23 equivalent contract rate. The earned finance charge is computed by
3-24 multiplying the daily rate of the finance charge by the number of
3-25 days the actual principal balance is outstanding.
3-26 SECTION 1.06. Articles 3A.101(a) and (c), Title 79, Revised
3-27 Statutes (Article 5069-3A.101, Vernon's Texas Civil Statutes), are
4-1 amended to read as follows:
4-2 (a) A person must hold a license issued under this chapter
4-3 to:
4-4 (1) engage in the business of making, transacting, or
4-5 negotiating loans subject to this chapter; or [and]
4-6 (2) contract for, charge, or receive, directly or
4-7 indirectly, in connection with a loan subject to this chapter, a
4-8 charge, including interest, compensation, consideration, or another
4-9 expense, authorized under this chapter that in the aggregate
4-10 exceeds the charges authorized under other law.
4-11 (c) A bank, savings bank, or savings and loan association
4-12 organized under the laws of the United States or under the laws of
4-13 the institution's state of domicile is not required to obtain a
4-14 license under Subsection (a).
4-15 SECTION 1.07. Articles 3A.102(b) and (c), Title 79, Revised
4-16 Statutes (Article 5069-3A.102, Vernon's Texas Civil Statutes), are
4-17 amended to read as follows:
4-18 (b) A person who is required to hold a license under this
4-19 chapter must hold a separate license for each office at which loans
4-20 are made, negotiated, serviced, held, or collected under this
4-21 chapter.
4-22 (c) A license is not required under this chapter for a place
4-23 of business:
4-24 (1) devoted to accounting or other recordkeeping; and
4-25 (2) at which loans are not made, negotiated, serviced,
4-26 held, or collected under this chapter or Chapter 15.
4-27 SECTION 1.08. Article 3A.202(a), Title 79, Revised Statutes
5-1 (Article 5069-3A.202, Vernon's Texas Civil Statutes), is amended to
5-2 read as follows:
5-3 (a) If the commissioner cannot verify that [requires,] an
5-4 applicant for a license under this chapter meets the net assets
5-5 requirement or if the commissioner questions the financial
5-6 responsibility or general fitness of the applicant, the
5-7 commissioner may require the applicant to [shall] file with the
5-8 application a bond that is:
5-9 (1) in an amount not to exceed the total of:
5-10 (A) $50,000 [$5,000] for the first license; and
5-11 (B) $10,000 [$1,000] for each additional
5-12 license;
5-13 (2) satisfactory to the commissioner; and
5-14 (3) issued by a surety company qualified to do
5-15 business as a surety in this state.
5-16 SECTION 1.09. Article 3A.302, Title 79, Revised Statutes
5-17 (Article 5069-3A.302, Vernon's Texas Civil Statutes), is amended to
5-18 read as follows:
5-19 Art. 3A.302. MAXIMUM CHARGE FOR LOAN WITH SINGLE REPAYMENT.
5-20 A loan contract that exceeds the maximum cash advance of Article
5-21 3A.401 and that is payable in a single installment may provide for
5-22 an interest charge on the cash advance that does not exceed a rate
5-23 or amount that would produce the same effective return, determined
5-24 as a true daily earnings rate, as allowed under Article 3A.301
5-25 having due consideration for the amount and term of the loan. If a
5-26 loan under this article is prepaid in full, the lender may earn a
5-27 minimum interest charge of $25.
6-1 SECTION 1.10. Article 3A.303(a), Title 79, Revised Statutes
6-2 (Article 5069-3A.303, Vernon's Texas Civil Statutes), is amended to
6-3 read as follows:
6-4 (a) A loan contract that includes precomputed interest or
6-5 uses the scheduled installment earnings method and that is a
6-6 regular transaction may provide for additional interest for
6-7 default if any part of an installment remains unpaid after the 10th
6-8 day after the date on which the installment is due, including
6-9 Sundays and holidays.
6-10 SECTION 1.11. Article 3A.304(a), Title 79, Revised Statutes
6-11 (Article 5069-3A.304, Vernon's Texas Civil Statutes), is amended to
6-12 read as follows:
6-13 (a) On a loan contract that includes precomputed interest or
6-14 uses the scheduled installment earnings method and that is a
6-15 regular transaction, an authorized lender may charge additional
6-16 interest for the deferment of an installment if:
6-17 (1) the entire amount of the installment is unpaid;
6-18 (2) no interest for default has been collected on the
6-19 installment; and
6-20 (3) payment of the installment is deferred for one or
6-21 more full months and the maturity of the contract is extended for a
6-22 corresponding period.
6-23 SECTION 1.12. Article 3A.403, Title 79, Revised Statutes
6-24 (Article 5069-3A.403, Vernon's Texas Civil Statutes), is amended to
6-25 read as follows:
6-26 Art. 3A.403. MAXIMUM INTEREST CHARGE FOR LOAN WITH SINGLE
6-27 REPAYMENT. A loan contract to which Article 3A.401 applies and
7-1 that is payable in a single installment may provide for an
7-2 acquisition charge and an interest charge on the cash advance that
7-3 does not exceed a rate or amount that would produce the same
7-4 effective return, determined as a true daily earnings rate, as
7-5 allowed under Article 3A.402 having due consideration for the
7-6 amount and term of the loan. If a loan that has a term of one
7-7 month or more under this article is prepaid in full, the lender may
7-8 earn a minimum of the acquisition charge and interest charge for
7-9 one month. If a loan under this article has an initial term of
7-10 less than one month, the lender may earn a minimum of the
7-11 acquisition charge and an interest charge that produces the same
7-12 effective return as the installment account handling charge
7-13 computed at a daily rate for the term the loan is outstanding.
7-14 SECTION 1.13. Article 3A.503(a), Title 79, Revised Statutes
7-15 (Article 5069-3A.503, Vernon's Texas Civil Statutes), is amended to
7-16 read as follows:
7-17 (a) On a secondary mortgage loan that includes precomputed
7-18 interest or uses the scheduled installment earnings method and that
7-19 is a regular transaction, an authorized lender may charge
7-20 additional interest for the deferment of an installment if:
7-21 (1) the entire amount of the installment is unpaid;
7-22 (2) no interest for default has been collected on the
7-23 installment; and
7-24 (3) payment of the installment is deferred for one or
7-25 more full months and the maturity of the contract is extended for a
7-26 corresponding period.
7-27 SECTION 1.14. Article 3A.507, Title 79, Revised Statutes
8-1 (Article 5069-3A.507, Vernon's Texas Civil Statutes), is amended to
8-2 read as follows:
8-3 Art. 3A.507. AMOUNTS AUTHORIZED TO BE INCLUDED IN CONTRACT.
8-4 A secondary mortgage loan contract may provide for:
8-5 (1) reasonable fees or charges paid to the trustee in
8-6 connection with a deed of trust or similar instrument executed in
8-7 connection with the secondary mortgage loan, including fees for
8-8 enforcing the lien against or posting for sale, selling, or
8-9 releasing the property secured by the deed of trust;
8-10 (2) reasonable fees paid to an attorney who is not an
8-11 employee of the creditor in the collection of a delinquent
8-12 secondary mortgage loan; or
8-13 (3) court costs and fees incurred in the collection of
8-14 the loan or foreclosure of a lien created by the loan[; or]
8-15 [(4) a fee that does not exceed $15 for the return by
8-16 a depository institution of a dishonored check, negotiable order of
8-17 withdrawal, or share draft offered in full or partial payment of a
8-18 secondary mortgage loan].
8-19 SECTION 1.15. Article 3A.508(a), Title 79, Revised Statutes
8-20 (Article 5069-3A.508, Vernon's Texas Civil Statutes), is amended to
8-21 read as follows:
8-22 (a) A lender or a person who is assigned a secondary
8-23 mortgage loan may collect on or before the closing of the loan, or
8-24 include in the principal of the loan:
8-25 (1) reasonable fees for:
8-26 (A) title examination and preparation of an
8-27 abstract of title by:
9-1 (i) an attorney who is not an employee of
9-2 the lender; or
9-3 (ii) a title company or property search
9-4 company authorized to do business in this state; or
9-5 (B) premiums or fees for title insurance or
9-6 title search for the benefit of the mortgagee and, at the
9-7 mortgagor's option, for title insurance or title search for the
9-8 benefit of the mortgagor;
9-9 (2) reasonable fees charged to the lender by an
9-10 attorney who is not a salaried employee of the lender for
9-11 preparation of the loan documents in connection with the mortgage
9-12 loan if the fees are evidenced by a statement for services rendered
9-13 [addressed to the lender];
9-14 (3) charges prescribed by law that are paid to public
9-15 officials for determining the existence of a security interest or
9-16 for perfecting, releasing, or satisfying a security interest;
9-17 (4) reasonable fees for an appraisal of real property
9-18 offered as security for the loan prepared by a licensed or
9-19 certified appraiser who is not a salaried employee of the lender;
9-20 (5) the reasonable cost of a credit report;
9-21 (6) reasonable fees for a survey of real property
9-22 offered as security for the loan prepared by a registered surveyor
9-23 who is not a salaried employee of the lender;
9-24 (7) the premiums received in connection with the sale
9-25 of credit life insurance, credit accident and health insurance, or
9-26 other insurance that protects the mortgagee against default by the
9-27 mortgagor, the benefits of which are applied in whole or in part to
10-1 reduce or extinguish the loan balance; or [and]
10-2 (8) reasonable fees relating to real property offered
10-3 as security for the loan that are incurred to comply with a
10-4 federally mandated program if the collection of the fees or the
10-5 participation in the program is required by a federal agency.
10-6 SECTION 1.16. Articles 3A.701(a) and (b), Title 79, Revised
10-7 Statutes (Article 5069-3A.701, Vernon's Texas Civil Statutes), are
10-8 amended to read as follows:
10-9 (a) On a loan that is subject to Subchapter E with a cash
10-10 advance of $300 or more, a lender may [request or] require a
10-11 borrower to insure tangible personal property offered as security
10-12 for the loan.
10-13 (b) On a secondary mortgage loan, a lender may [request or]
10-14 require a borrower to provide property insurance as security
10-15 against reasonable risks of loss, damage, and destruction.
10-16 SECTION 1.17. Articles 3A.702(a) and (c), Title 79, Revised
10-17 Statutes (Article 5069-3A.702, Vernon's Texas Civil Statutes), are
10-18 amended to read as follows:
10-19 (a) On a loan made under this chapter that is subject to
10-20 Subchapter E with a cash advance of $100 or more, a lender may:
10-21 (1) offer [or request that] a borrower [provide]
10-22 credit life insurance and credit health and accident insurance as
10-23 additional protection for the loan; and
10-24 (2) offer involuntary unemployment insurance to the
10-25 borrower at the time the loan is made.
10-26 (c) On a secondary mortgage loan made under this chapter, a
10-27 lender may [request or] require that a borrower provide credit life
11-1 insurance and credit accident and health insurance as additional
11-2 protection for the loan.
11-3 SECTION 1.18. Article 3A.804, Title 79, Revised Statutes
11-4 (Article 5069-3A.804, Vernon's Texas Civil Statutes), is amended to
11-5 read as follows:
11-6 Art. 3A.804. RETURN OF INSTRUMENTS TO BORROWER ON REPAYMENT.
11-7 Within a reasonable time after a loan is repaid in full or an
11-8 open-end account is terminated according to the terms of the
11-9 contract, a lender shall cancel and return to a borrower any
11-10 instrument, including a note, assignment, security agreement, or
11-11 mortgage[, or pledged property] that:
11-12 (1) secured the loan; and
11-13 (2) does not secure another indebtedness of the
11-14 borrower to the lender.
11-15 SECTION 1.19. Article 3A.852, Title 79, Revised Statutes
11-16 (Article 5069-3A.852, Vernon's Texas Civil Statutes), is amended by
11-17 amending Subsection (b) and adding Subsection (c) to read as
11-18 follows:
11-19 (b) On a loan subject to Subchapter E or a secondary
11-20 mortgage loan subject to Subchapter G a lender may assess and
11-21 collect from the borrower an amount incurred by the lender for:
11-22 (1) court costs;
11-23 (2) attorney's fees assessed by a court, in addition
11-24 to those provided for in Article 3A.507;
11-25 (3) a fee authorized by law for filing, recording, or
11-26 releasing in a public office a security for a loan;
11-27 (4) a reasonable amount spent for repossessing,
12-1 storing, preparing for sale, or selling any security;
12-2 (5) a fee for recording a lien on or transferring a
12-3 certificate of title to a motor vehicle offered as security for a
12-4 loan made under this chapter; or
12-5 (6) a premium or an identifiable charge received in
12-6 connection with the sale of insurance authorized under this
12-7 chapter.
12-8 (c) On a loan subject to this chapter a lender may assess
12-9 and collect a fee that does not exceed the amount prescribed by
12-10 Chapter 617, Acts of the 68th Legislature, Regular Session, 1983
12-11 (Article 9022, Vernon's Texas Civil Statutes), for the return by a
12-12 depository institution of a dishonored check, negotiable order of
12-13 withdrawal, or share draft offered in full or partial payment of a
12-14 loan.
12-15 ARTICLE 2. AMENDMENTS TO FINANCE CODE
12-16 SECTION 2.01. Sections 301.002(b) and (c), Finance Code, are
12-17 amended to read as follows:
12-18 (b) [These definitions shall be liberally construed to
12-19 accomplish the purposes of this subtitle.]
12-20 [(c)] The Finance Commission of Texas by rule may adopt
12-21 other definitions to accomplish the purposes of this title
12-22 [subtitle].
12-23 SECTION 2.02. Section 302.102, Finance Code, is amended to
12-24 read as follows:
12-25 Sec. 302.102. PROHIBITION ON PREPAYMENT PENALTY. If the
12-26 interest rate on a loan for property that is or is to be the
12-27 residential homestead of the borrower is greater than 12 percent a
13-1 year, a prepayment penalty may not be collected on the loan unless
13-2 the penalty is required by an agency created by federal law.
13-3 SECTION 2.03. Section 303.003(c), Finance Code, is amended
13-4 to read as follows:
13-5 (c) In this subchapter [section], "auction rate" means the
13-6 auction average rate quoted on a bank discount basis for 26-week
13-7 treasury bills issued by the United States government, as published
13-8 by the Federal Reserve Board, for the week preceding the week in
13-9 which the weekly rate ceiling is to take effect.
13-10 SECTION 2.04. Section 342.001, Finance Code, is amended to
13-11 read as follows:
13-12 Sec. 342.001. DEFINITIONS. In this chapter:
13-13 (1) "Irregular transaction" means a loan:
13-14 (A) that is payable in installments that are not
13-15 consecutive, monthly, and substantially equal in amount; or
13-16 (B) the first scheduled installment of which is
13-17 due later than one month and 15 days after the date of the loan.
13-18 (2) "Regular transaction" means a loan:
13-19 (A) that is payable in installments that are
13-20 consecutive, monthly, and substantially equal in amount; and
13-21 (B) the first scheduled installment of which is
13-22 due within one month and 15 days after the date of the loan.
13-23 (3) "Regulated loan license" means a consumer loan
13-24 license.
13-25 (4) "Secondary mortgage loan" means a loan that is:
13-26 (A) secured in whole or in part by an interest,
13-27 including a lien or security interest, in real property that is:
14-1 (i) improved by a dwelling designed for
14-2 occupancy by four or fewer families; and
14-3 (ii) subject to one or more liens,
14-4 security interests, prior mortgages, or deeds of trust; and
14-5 (B) not to be repaid before the 91st day after
14-6 the date of the loan.
14-7 SECTION 2.05. Sections 342.002(a) and (b), Finance Code, are
14-8 amended to read as follows:
14-9 (a) The scheduled installment earnings method is a method
14-10 to compute an interest charge by applying a daily rate to the
14-11 unpaid balance of the principal amount [financed] as if each
14-12 payment will be made on its scheduled installment date. A payment
14-13 received before or after the due date does not affect the amount of
14-14 the scheduled principal reduction.
14-15 (b) The true daily earnings method is a method to compute an
14-16 interest charge by applying a daily rate to the unpaid balance of
14-17 the principal amount [financed]. The earned finance charge is
14-18 computed by multiplying the daily rate by the number of days the
14-19 principal balance is outstanding.
14-20 SECTION 2.06. Sections 342.051(a) and (c), Finance Code, are
14-21 amended to read as follows:
14-22 (a) A person must hold a license issued under this chapter
14-23 to:
14-24 (1) engage in the business of making, transacting, or
14-25 negotiating loans subject to this chapter; or [and]
14-26 (2) contract for, charge, or receive, directly or
14-27 indirectly, in connection with a loan subject to this chapter, a
15-1 charge, including interest, compensation, consideration, or another
15-2 expense, authorized under this chapter that in the aggregate
15-3 exceeds the charges authorized under other law.
15-4 (c) A person is not required to obtain a license under
15-5 Subsection (a) if the person is:
15-6 (1) a bank, savings bank, or savings and loan
15-7 association organized under the laws of the United States or under
15-8 the laws of the institution's state of domicile; or
15-9 (2) subject to Chapter 24, Insurance Code.
15-10 SECTION 2.07. Sections 342.052(b) and (c), Finance Code, are
15-11 amended to read as follows:
15-12 (b) A person who is required to hold a license under this
15-13 chapter must hold a separate license for each office at which loans
15-14 are made, negotiated, serviced, held, or collected under this
15-15 chapter.
15-16 (c) A license is not required under this chapter for a place
15-17 of business:
15-18 (1) devoted to accounting or other recordkeeping; and
15-19 (2) at which loans are not made, negotiated, serviced,
15-20 held, or collected under this chapter or Chapter 346.
15-21 SECTION 2.08. Section 342.102(a), Finance Code, is amended
15-22 to read as follows:
15-23 (a) If the commissioner requires, an applicant for a license
15-24 under this chapter shall file with the application a bond that is:
15-25 (1) in an amount not to exceed the total of:
15-26 (A) $50,000 [$5,000] for the first license; and
15-27 (B) $10,000 [$1,000] for each additional
16-1 license;
16-2 (2) satisfactory to the commissioner; and
16-3 (3) issued by a surety company qualified to do
16-4 business as a surety in this state.
16-5 SECTION 2.09. Section 342.202, Finance Code, is amended to
16-6 read as follows:
16-7 Sec. 342.202. MAXIMUM CHARGE FOR LOAN WITH SINGLE REPAYMENT.
16-8 A loan contract that exceeds the maximum cash advance under Section
16-9 342.251 and that is payable in a single installment may provide for
16-10 an interest charge on the cash advance that does not exceed a rate
16-11 or amount that would produce the same effective return, determined
16-12 as a true daily earnings rate, as allowed under Section 342.201
16-13 considering the amount and term of the loan. If a loan under this
16-14 section is prepaid in full, the lender may earn a minimum interest
16-15 charge of $25.
16-16 SECTION 2.10. Section 342.203(a), Finance Code, is amended
16-17 to read as follows:
16-18 (a) A loan contract that includes precomputed interest or
16-19 uses the scheduled installment earnings method and that is a
16-20 regular transaction may provide for additional interest for
16-21 default if any part of an installment remains unpaid after the 10th
16-22 day after the date on which the installment is due, including
16-23 Sundays and holidays.
16-24 SECTION 2.11. Section 342.204(a), Finance Code, is amended
16-25 to read as follows:
16-26 (a) On a loan contract that includes precomputed interest or
16-27 uses the scheduled installment earnings method and that is a
17-1 regular transaction, an authorized lender may charge additional
17-2 interest for the deferment of an installment if:
17-3 (1) the entire amount of the installment is unpaid;
17-4 (2) no interest for default has been collected on the
17-5 installment; and
17-6 (3) payment of the installment is deferred for one or
17-7 more full months and the maturity of the contract is extended for a
17-8 corresponding period.
17-9 SECTION 2.12. Section 342.253, Finance Code, is amended to
17-10 read as follows:
17-11 Sec. 342.253. MAXIMUM INTEREST CHARGE FOR LOAN WITH SINGLE
17-12 REPAYMENT. A loan contract to which Section 342.251 applies and
17-13 that is payable in a single installment may provide for an
17-14 acquisition charge and an interest charge on the cash advance that
17-15 does not exceed a rate or amount that would produce the same
17-16 effective return, determined as a true daily earnings rate, as
17-17 allowed under Section 342.252 considering the amount and term of
17-18 the loan. If a loan that has a term in excess of one month under
17-19 this section is prepaid in full, the lender may earn a minimum of
17-20 the acquisition charge and interest charge for one month. If a
17-21 loan under this section has an initial term of less than one month,
17-22 the lender may earn a minimum of the acquisition charge and an
17-23 interest charge that produces the same effective return as the
17-24 installment account handling charge computed at a daily rate for
17-25 the term the loan is outstanding.
17-26 SECTION 2.13. Section 342.303(a), Finance Code, is amended
17-27 to read as follows:
18-1 (a) On a secondary mortgage loan that includes precomputed
18-2 interest or uses the scheduled installment earnings method and
18-3 that is a regular transaction, an authorized lender may charge
18-4 additional interest for the deferment of an installment if:
18-5 (1) the entire amount of the installment is unpaid;
18-6 (2) no interest for default has been collected on the
18-7 installment; and
18-8 (3) payment of the installment is deferred for one or
18-9 more full months and the maturity of the contract is extended for a
18-10 corresponding period.
18-11 SECTION 2.14. Section 342.307, Finance Code, is amended to
18-12 read as follows:
18-13 Sec. 342.307. AMOUNTS AUTHORIZED TO BE INCLUDED IN CONTRACT.
18-14 A secondary mortgage loan contract may provide for:
18-15 (1) reasonable fees or charges paid to the trustee in
18-16 connection with a deed of trust or similar instrument executed in
18-17 connection with the secondary mortgage loan, including fees for
18-18 enforcing the lien against or posting for sale, selling, or
18-19 releasing the property secured by the deed of trust;
18-20 (2) reasonable fees paid to an attorney who is not an
18-21 employee of the creditor in the collection of a delinquent
18-22 secondary mortgage loan; or
18-23 (3) court costs and fees incurred in the collection of
18-24 the loan or foreclosure of a lien created by the loan[; and]
18-25 [(4) a fee that does not exceed $15 for the return by
18-26 a depository institution of a dishonored check, negotiable order of
18-27 withdrawal, or share draft offered in full or partial payment of a
19-1 secondary mortgage loan].
19-2 SECTION 2.15. Section 342.308(a), Finance Code, is amended
19-3 to read as follows:
19-4 (a) A lender or a person who is assigned a secondary
19-5 mortgage loan may collect on or before the closing of the loan, or
19-6 include in the principal of the loan:
19-7 (1) reasonable fees for:
19-8 (A) title examination and preparation of an
19-9 abstract of title by:
19-10 (i) an attorney who is not an employee of
19-11 the lender; or
19-12 (ii) a title company or property search
19-13 company authorized to do business in this state; or
19-14 (B) premiums or fees for title insurance or
19-15 title search for the benefit of the mortgagee and, at the
19-16 mortgagor's option, for title insurance or title search for the
19-17 benefit of the mortgagor;
19-18 (2) reasonable fees charged to the lender by an
19-19 attorney who is not a salaried employee of the lender for
19-20 preparation of the loan documents in connection with the mortgage
19-21 loan if the fees are evidenced by a statement for services rendered
19-22 [addressed to the lender];
19-23 (3) charges prescribed by law that are paid to public
19-24 officials for determining the existence of a security interest or
19-25 for perfecting, releasing, or satisfying a security interest;
19-26 (4) reasonable fees for an appraisal of real property
19-27 offered as security for the loan prepared by a licensed or
20-1 certified appraiser who is not a salaried employee of the lender;
20-2 (5) the reasonable cost of a credit report;
20-3 (6) reasonable fees for a survey of real property
20-4 offered as security for the loan prepared by a registered surveyor
20-5 who is not a salaried employee of the lender;
20-6 (7) the premiums received in connection with the sale
20-7 of credit life insurance, credit accident and health insurance, or
20-8 other insurance that protects the mortgagee against default by the
20-9 mortgagor, the benefits of which are applied in whole or in part to
20-10 reduce or extinguish the loan balance; or [and]
20-11 (8) reasonable fees relating to real property offered
20-12 as security for the loan that are incurred to comply with a
20-13 federally mandated program if the collection of the fees or the
20-14 participation in the program is required by a federal agency.
20-15 SECTION 2.16. Sections 342.401(a) and (b), Finance Code, are
20-16 amended to read as follows:
20-17 (a) On a loan that is subject to Subchapter E with a cash
20-18 advance of $300 or more, a lender may [request or] require a
20-19 borrower to insure tangible personal property offered as security
20-20 for the loan.
20-21 (b) On a secondary mortgage loan, a lender may [request or]
20-22 require a borrower to provide property insurance as security
20-23 against reasonable risks of loss, damage, and destruction.
20-24 SECTION 2.17. Sections 342.402(a) and (c), Finance Code, are
20-25 amended to read as follows:
20-26 (a) On a loan made under this chapter that is subject to
20-27 Subchapter E with a cash advance of $100 or more, a lender may:
21-1 (1) offer [or request that] a borrower [provide]
21-2 credit life insurance and credit health and accident insurance as
21-3 additional protection for the loan; and
21-4 (2) offer involuntary unemployment insurance to the
21-5 borrower at the time the loan is made.
21-6 (c) On a secondary mortgage loan made under this chapter, a
21-7 lender may [request or] require that a borrower provide credit life
21-8 insurance and credit accident and health insurance as additional
21-9 protection for the loan.
21-10 SECTION 2.18. Section 342.454, Finance Code, is amended to
21-11 read as follows:
21-12 Sec. 342.454. RETURN OF INSTRUMENTS TO BORROWER ON
21-13 REPAYMENT. Within a reasonable time after a loan is repaid in
21-14 full or an open-end account is terminated according to the terms of
21-15 the contract, a lender shall cancel and return to a borrower any
21-16 instrument, including a note, assignment, security agreement, or
21-17 mortgage[, or pledged property] that:
21-18 (1) secured the loan; and
21-19 (2) does not secure another indebtedness of the
21-20 borrower to the lender.
21-21 SECTION 2.19. Section 342.502, Finance Code, is amended by
21-22 amending Subsection (b) and adding Subsection (d) to read as
21-23 follows:
21-24 (b) On a loan subject to Subchapter E or a secondary
21-25 mortgage loan subject to Subchapter G a lender may assess and
21-26 collect from the borrower:
21-27 (1) an amount incurred by the lender for:
22-1 (A) court costs;
22-2 (B) attorney's fees assessed by a court, in
22-3 addition to those provided by Section 342.307;
22-4 (C) a fee authorized by law for filing,
22-5 recording, or releasing in a public office a security for a loan;
22-6 (D) a reasonable amount spent for repossessing,
22-7 storing, preparing for sale, or selling any security;
22-8 (E) a fee for recording a lien on or
22-9 transferring a certificate of title to a motor vehicle offered as
22-10 security for a loan made under this chapter; or
22-11 (F) a premium or an identifiable charge received
22-12 in connection with the sale of insurance authorized under this
22-13 chapter; and
22-14 (2) an administrative fee, subject to Subsection (c),
22-15 in an amount not to exceed:
22-16 (A) $25 for a loan of more than $1,000; or
22-17 (B) $10 for a loan of $1,000 or less.
22-18 (d) On a loan subject to this chapter a lender may assess
22-19 and collect a fee that does not exceed the amount prescribed by
22-20 Chapter 617, Acts of the 68th Legislature, Regular Session, 1983
22-21 (Article 9022, Vernon's Texas Civil Statutes), for the return by a
22-22 depository institution of a dishonored check, negotiable order of
22-23 withdrawal, or share draft offered in full or partial payment of a
22-24 loan.
22-25 ARTICLE 3. EFFECTIVE DATE; EMERGENCY
22-26 SECTION 3.01. (a) Except as provided by Subsections (b) and
22-27 (c), this Act takes effect September 1, 1999.
23-1 (b) Article 1 of this Act takes effect only if the Act of
23-2 the 76th Legislature, Regular Session, 1999, relating to
23-3 nonsubstantive additions and corrections in enacted codes does not
23-4 take effect.
23-5 (c) Article 2 of this Act takes effect only if the Act of
23-6 the 76th Legislature, Regular Session, 1999, relating to
23-7 nonsubstantive additions and corrections in enacted codes takes
23-8 effect.
23-9 SECTION 3.02. The importance of this legislation and the
23-10 crowded condition of the calendars in both houses create an
23-11 emergency and an imperative public necessity that the
23-12 constitutional rule requiring bills to be read on three several
23-13 days in each house be suspended, and this rule is hereby suspended.