By:  Averitt                                                      S.B. No. 1429


A BILL TO BE ENTITLED

AN ACT

relating to certain agreements offered in connection with a loan.             
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter I, Chapter 342, Finance Code, is 
amended by adding Section 342.4021 to read as follows:
	Sec. 342.4021.  DEBT CANCELLATION AND DEBT SUSPENSION 
AGREEMENTS, GAP WAIVER AGREEMENTS, SERVICE CONTRACTS.  (a)  On a 
loan made under this chapter that is subject to Section 342.201(d), 
a lender may offer to the borrower at the time the loan is made:
		(1)  a debt cancellation agreement and debt suspension 
agreement, if the cash advance of the loan is $100 or more; or
		(2)  a gap waiver agreement, service contract, debt 
suspension agreement, debt cancellation agreement, or any of the 
above, if the loan is secured by a motor vehicle.
	(b)  A lender may not require that a borrower accept or 
provide an agreement or contract under Subsection (a).
	(c)  Prior to offering the products authorized in this 
section, the lender shall provide a disclosure comparable to that 
provided in Section 305 of the Gramm-Leach-Bliley Act informing the 
borrower that purchase of the product is not required in order to 
obtain the credit.  As applicable, the disclosure shall also inform 
the borrower that the product is not a deposit or other obligation 
of, or guaranteed by the insured depository institution and the 
product is not insured by the FDIC or any other agency of the United 
States, the depository financial institution, or (if applicable) an 
affiliate of the institution.
	(d)  The Finance Commission shall issue rules implementing 
paragraph (c).
	SECTION 2.  Section 342.411, Finance Code, is amended to 
read as follows:    
	Sec. 342.411.  INSURANCE OR OTHER PRODUCT GAIN NOT INTEREST.  
Any gain or advantage to the lender or the lender's employee, 
officer, director, agent, general agent, affiliate, or associate 
from insurance or other products under this subchapter or the 
provision or sale of insurance or other products under this 
subchapter is not additional interest or an additional charge in 
connection with a loan made under this chapter except as 
specifically provided by this chapter.
	SECTION 3.  This Act takes effect immediately if it receives 
a vote of two-thirds of all the members elected to each house, as 
provided by Section 39, Article III, Texas Constitution.  If this 
Act does not receive the vote necessary for immediate effect, this 
Act takes effect September 1, 2003.