S.B. 774 78(R) BILL ANALYSIS S.B. 774 By: Averitt Financial Institutions Committee Report (Unamended) BACKGROUND AND PURPOSE Current Texas law is unclear concerning procedures for revolving lines of credit secured by real property. S.B. 774 provides the necessary statutory framework to ensure that transactions involving a line of credit secured by real property are handled appropriately by lending institutions. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution. ANALYSIS S.B. 774 expressly permits a creditor to take real or personal property as collateral. The bill limits the interest rate of a revolving credit account to the greater of 18 percent or the applicable alternative rate ceiling under Chapter 303, Finance Code. A creditor is permitted to receive certain fees or charges as if the revolving credit account were a secondary mortgage loan. The bill prohibits a creditor from accelerating or demanding immediate payment unless the customer is in default under the terms of a revolving credit account secured by real property. The bill requires creditors in a revolving credit account to hold a license under Chapter 342, Finance Code unless specifically exempted. EFFECTIVE DATE September 1, 2003