1-1 By: Ehrhardt (Senate Sponsor - Carona) H.B. No. 2338
1-2 (In the Senate - Received from the House May 10, 1999;
1-3 May 10, 1999, read first time and referred to Committee on Economic
1-4 Development; May 14, 1999, reported favorably by the following
1-5 vote: Yeas 5, Nays 0; May 14, 1999, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to certain charges for administration of loans and loan
1-9 applications.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 ARTICLE 1. AMENDMENTS TO TITLE 79, REVISED STATUTES
1-12 SECTION 1.01. Article 3A.301, Title 79, Revised Statutes
1-13 (Article 5069-3A.301, Vernon's Texas Civil Statutes), is amended by
1-14 adding Subsection (e) to read as follows:
1-15 (e) A loan contract under this subchapter may provide for an
1-16 administrative fee in an amount not to exceed $25 for a loan of
1-17 more than $1,000 or $20 for a loan of $1,000 or less. The
1-18 administrative fee is considered earned when the loan is made or
1-19 refinanced and is not subject to refund. A lender refinancing the
1-20 loan may not contract for or receive an administrative fee for the
1-21 loan more than once in any 180-day period. Fifty cents of each
1-22 administrative fee shall be deposited with the comptroller for use
1-23 in carrying out the finance commission's responsibilities under
1-24 Section 11.305, Finance Code.
1-25 SECTION 1.02. Section 3A.508, Title 79, Revised Statutes
1-26 (Article 5069-3A.508, Vernon's Texas Civil Statutes), is amended by
1-27 amending Subsection (a) and adding Subsection (c) to read as
1-28 follows:
1-29 (a) A lender or a person who is assigned a secondary
1-30 mortgage loan may collect on or before the closing of the loan, or
1-31 include in the principal of the loan:
1-32 (1) reasonable fees for:
1-33 (A) title examination and preparation of an
1-34 abstract of title by:
1-35 (i) an attorney who is not an employee of
1-36 the lender; or
1-37 (ii) a title company or property search
1-38 company authorized to do business in this state; or
1-39 (B) premiums or fees for title insurance or
1-40 title search for the benefit of the mortgagee and, at the
1-41 mortgagor's option, for title insurance or title search for the
1-42 benefit of the mortgagor;
1-43 (2) reasonable fees charged to the lender by an
1-44 attorney who is not a salaried employee of the lender for
1-45 preparation of the loan documents in connection with the mortgage
1-46 loan if the fees are evidenced by a statement for services rendered
1-47 addressed to the lender;
1-48 (3) charges prescribed by law that are paid to public
1-49 officials for determining the existence of a security interest or
1-50 for perfecting, releasing, or satisfying a security interest;
1-51 (4) reasonable fees for an appraisal of real property
1-52 offered as security for the loan prepared by a certified appraiser
1-53 who is not a salaried employee of the lender;
1-54 (5) the reasonable cost of a credit report;
1-55 (6) reasonable fees for a survey of real property
1-56 offered as security for the loan prepared by a registered surveyor
1-57 who is not a salaried employee of the lender;
1-58 (7) the premiums received in connection with the sale
1-59 of credit life insurance, credit accident and health insurance, or
1-60 other insurance that protects the mortgagee against default by the
1-61 mortgagor, the benefits of which are applied in whole or in part to
1-62 reduce or extinguish the loan balance; [and]
1-63 (8) reasonable fees relating to real property offered
1-64 as security for the loan that are incurred to comply with a
2-1 federally mandated program if the collection of the fees or the
2-2 participation in the program is required by a federal agency; and
2-3 (9) an administrative fee, subject to Subsection (c),
2-4 in an amount not to exceed $25 for a loan of more than $1,000 or
2-5 $20 for a loan of $1,000 or less.
2-6 (c) An administrative fee under Subsection (a)(9) is
2-7 considered earned when the loan is made or refinanced and is not
2-8 subject to refund. A lender refinancing the loan may not contract
2-9 for or receive an administrative fee for the loan more than once in
2-10 any 180-day period. Fifty cents of each administrative fee shall
2-11 be deposited with the comptroller for use in carrying out the
2-12 finance commission's responsibilities under Section 11.305, Finance
2-13 Code.
2-14 ARTICLE 2. AMENDMENTS TO FINANCE CODE
2-15 SECTION 2.01. Section 342.201, Finance Code, is amended by
2-16 adding Subsection (e) to read as follows:
2-17 (e) A loan contract under this subchapter may provide for an
2-18 administrative fee in an amount not to exceed $25 for a loan of
2-19 more than $1,000 or $20 for a loan of $1,000 or less. The
2-20 administrative fee is considered earned when the loan is made or
2-21 refinanced and is not subject to refund. A lender refinancing the
2-22 loan may not contract for or receive an administrative fee for the
2-23 loan more than once in any 180-day period. Fifty cents of each
2-24 administrative fee shall be deposited with the comptroller for use
2-25 in carrying out the finance commission's responsibilities under
2-26 Section 11.305.
2-27 SECTION 2.02. Section 342.308, Finance Code, is amended by
2-28 amending Subsection (a) and adding Subsection (c) to read as
2-29 follows:
2-30 (a) A lender or a person who is assigned a secondary
2-31 mortgage loan may collect on or before the closing of the loan, or
2-32 include in the principal of the loan:
2-33 (1) reasonable fees for:
2-34 (A) title examination and preparation of an
2-35 abstract of title by:
2-36 (i) an attorney who is not an employee of
2-37 the lender; or
2-38 (ii) a title company or property search
2-39 company authorized to do business in this state; or
2-40 (B) premiums or fees for title insurance or
2-41 title search for the benefit of the mortgagee and, at the
2-42 mortgagor's option, for title insurance or title search for the
2-43 benefit of the mortgagor;
2-44 (2) reasonable fees charged to the lender by an
2-45 attorney who is not a salaried employee of the lender for
2-46 preparation of the loan documents in connection with the mortgage
2-47 loan if the fees are evidenced by a statement for services rendered
2-48 addressed to the lender;
2-49 (3) charges prescribed by law that are paid to public
2-50 officials for determining the existence of a security interest or
2-51 for perfecting, releasing, or satisfying a security interest;
2-52 (4) reasonable fees for an appraisal of real property
2-53 offered as security for the loan prepared by a certified appraiser
2-54 who is not a salaried employee of the lender;
2-55 (5) the reasonable cost of a credit report;
2-56 (6) reasonable fees for a survey of real property
2-57 offered as security for the loan prepared by a registered surveyor
2-58 who is not a salaried employee of the lender;
2-59 (7) the premiums received in connection with the sale
2-60 of credit life insurance, credit accident and health insurance, or
2-61 other insurance that protects the mortgagee against default by the
2-62 mortgagor, the benefits of which are applied in whole or in part to
2-63 reduce or extinguish the loan balance; [and]
2-64 (8) reasonable fees relating to real property offered
2-65 as security for the loan that are incurred to comply with a
2-66 federally mandated program if the collection of the fees or the
2-67 participation in the program is required by a federal agency; and
2-68 (9) an administrative fee, subject to Subsection (c),
2-69 in an amount not to exceed $25 for a loan of more than $1,000 or
3-1 $20 for a loan of $1,000 or less.
3-2 (c) An administrative fee under Subsection (a)(9) is
3-3 considered earned when the loan is made or refinanced and is not
3-4 subject to refund. A lender refinancing the loan may not contract
3-5 for or receive an administrative fee for the loan more than once in
3-6 any 180-day period. Fifty cents of each administrative fee shall
3-7 be deposited with the comptroller for use in carrying out the
3-8 finance commission's responsibilities under Section 11.305.
3-9 SECTION 2.03. Section 342.502(b), Finance Code, is amended
3-10 to read as follows:
3-11 (b) On a loan subject to Subchapter E or a secondary
3-12 mortgage loan subject to Subchapter G a lender may assess and
3-13 collect from the borrower[:]
3-14 [(1)] an amount incurred by the lender for:
3-15 (1) [(A)] court costs;
3-16 (2) [(B)] attorney's fees assessed by a court;
3-17 (3) [(C)] a fee authorized by law for filing,
3-18 recording, or releasing in a public office a security for a loan;
3-19 (4) [(D)] a reasonable amount spent for repossessing,
3-20 storing, preparing for sale, or selling any security;
3-21 (5) [(E)] a fee for recording a lien on or
3-22 transferring a certificate of title to a motor vehicle offered as
3-23 security for a loan made under this chapter; or
3-24 (6) [(F)] a premium or an identifiable charge received
3-25 in connection with the sale of insurance authorized under this
3-26 chapter[; and]
3-27 [(2) an administrative fee, subject to Subsection (c),
3-28 in an amount not to exceed:]
3-29 [(A) $25 for a loan of more than $1,000; or]
3-30 [(B) $10 for a loan of $1,000 or less].
3-31 SECTION 2.04. Section 342.502(c), Finance Code, is repealed.
3-32 ARTICLE 3. EFFECTIVE DATE; EMERGENCY
3-33 SECTION 3.01. (a) Except as provided by Subsections (b) and
3-34 (c) of this section, this Act takes effect September 1, 1999.
3-35 (b) Article 1 of this Act takes effect only if the Act of
3-36 the 76th Legislature, Regular Session, 1999, relating to
3-37 nonsubstantive additions to and corrections in enacted codes does
3-38 not take effect.
3-39 (c) Article 2 of this Act takes effect only if the Act of
3-40 the 76th Legislature, Regular Session, 1999, relating to
3-41 nonsubstantive additions to and corrections in enacted codes takes
3-42 effect.
3-43 SECTION 3.02. The importance of this legislation and the
3-44 crowded condition of the calendars in both houses create an
3-45 emergency and an imperative public necessity that the
3-46 constitutional rule requiring bills to be read on three several
3-47 days in each house be suspended, and this rule is hereby suspended.
3-48 * * * * *