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A BILL TO BE ENTITLED
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AN ACT
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relating to the extension of consumer credit to certain members of |
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the Texas National Guard and armed forces of the United States and |
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their dependents; providing a penalty. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle B, Title 4, Finance Code, is amended by |
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adding Chapter 351 to read as follows: |
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CHAPTER 351. EXTENSION OF CONSUMER CREDIT TO SERVICEMEMBERS OR |
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THEIR DEPENDENTS |
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Sec. 351.001. DEFINITIONS. In this chapter: |
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(1) "Creditor" means a person engaged in the business |
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of extending consumer credit. |
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(2) "Dependent," with respect to a servicemember, |
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means the servicemember's spouse or dependent child. |
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(3) "Dependent child" means a person who is unmarried |
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and who: |
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(A) is under 18 years of age; |
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(B) before the person's 18th birthday, became |
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permanently incapable of self-support; or |
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(C) is under 23 years of age and is pursuing a |
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course of instruction at an approved educational institution. |
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(4) "Extension of consumer credit" means the right to |
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defer payment of debt offered or granted primarily for personal, |
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family, or household purposes or to incur the debt and defer its |
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payment. |
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(5) "Servicemember" means a member of the United |
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States armed forces or a member of the Texas National Guard called |
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to federal active duty. |
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Sec. 351.002. INAPPLICABILITY OF CHAPTER. This chapter |
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does not apply to: |
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(1) an insured depository institution, as that term is |
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defined by Section 3, Federal Deposit Insurance Act (12 U.S.C. |
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Section 1813); or |
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(2) an insured credit union, as that term is defined by |
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Section 101, Federal Credit Union Act (12 U.S.C. Section 1752). |
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Sec. 351.003. INTEREST. (a) In this section, "interest" |
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includes a service charge, renewal charge, fee, and any other |
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charge, except a charge for bona fide insurance, with respect to the |
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extension of consumer credit. |
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(b) A creditor who extends consumer credit to a |
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servicemember or a servicemember's dependent may not, with respect |
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to the transaction, require the servicemember or dependent to pay |
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interest that is: |
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(1) not agreed to by the parties under the terms of the |
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agreement or promissory note; or |
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(2) specifically prohibited by this chapter or other |
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law. |
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Sec. 351.004. MAXIMUM ANNUAL PERCENTAGE RATE. A creditor |
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may not impose an annual percentage rate that exceeds 36 percent |
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with respect to an extension of consumer credit to a servicemember |
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or a servicemember's dependent. |
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Sec. 351.005. INFORMATION REQUIRED. (a) Before |
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finalizing an extension of consumer credit made to a servicemember |
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or a servicemember's dependent, a creditor must provide the |
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servicemember or dependent with the following written information: |
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(1) a statement of the annual percentage rate |
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applicable to the extension of credit; |
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(2) all disclosures required to be made under the |
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Truth in Lending Act (15 U.S.C. Section 1601 et seq.); and |
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(3) a clear description of the payment obligations of |
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the servicemember or dependent. |
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(b) Before finalizing an extension of consumer credit, a |
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creditor must provide a written form, to be signed by the |
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individual, stating whether or not the individual who is the |
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subject of the extension of credit is a servicemember, a |
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servicemember's spouse, or a servicemember's dependent child. |
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Sec. 351.006. RENEWAL, REFINANCING, OR CONSOLIDATION OF |
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CREDIT. A creditor may not renew, repay, or refinance consumer |
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credit extended to a servicemember or a servicemember's dependent, |
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or consolidate any part of the proceeds of the extension of credit |
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with proceeds from any other extension of credit to that person by |
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the creditor, unless the creditor: |
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(1) executes new loan documentation that is signed by |
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the servicemember or dependent; and |
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(2) provides the information required by Section |
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351.005(a). |
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Sec. 351.007. CRIMINAL PENALTY. A creditor who knowingly |
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violates this chapter commits an offense. An offense under this |
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section is a Class A misdemeanor. |
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Sec. 351.008. REMEDIES NOT EXCLUSIVE. The remedies and |
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rights available under this chapter are in addition to and do not |
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preclude any remedy otherwise available under law to a |
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servicemember or a servicemember's dependents, including any award |
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for consequential or punitive damages. |
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SECTION 2. Chapter 351, Finance Code, as added by this Act, |
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applies only to an extension of consumer credit made on or after the |
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effective date of this Act. An extension of consumer credit made |
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before the effective date of this Act is governed by the law in |
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effect on the date the extension of consumer credit was made, and |
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the former law is continued in effect for that purpose. |
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SECTION 3. This Act takes effect September 1, 2007. |