By: McCall H.B. No. 2438
  COMMITTEE SUBSTITUTE FOR H.B. No. 2438By:  Lucio By:  Lucio
         (In the Senate - Received from the House May 12, 2009;
  May 13, 2009, read first time and referred to Committee on Business
  and Commerce; May 23, 2009, reported adversely, with favorable
  Committee Substitute by the following vote:  Yeas 8, Nays 0;
  May 23, 2009, sent to printer.)
 
 
A BILL TO BE ENTITLED
 
AN ACT
 
  relating to requirements regarding motor vehicle retail
  installment transactions.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 348.001(3), Finance Code, is amended to
  read as follows:
               (3)  "Holder" means a person who is:
                     (A)  a retail seller; or
                     (B)  the assignee or transferee of [if] a retail
  installment contract [or the outstanding balance under the contract
  is sold or otherwise transferred, the person to whom it is sold or
  otherwise transferred].
         SECTION 2.  Section 348.007, Finance Code, is amended by
  amending Subsection (a) and adding Subsection (a-2) to read as
  follows:
         (a)  Except as otherwise provided by this section, each
  [Each] retail installment transaction is subject to this chapter.
         (a-2)  A retail installment transaction in which a retail
  buyer purchases a commercial vehicle is only subject to the
  following provisions of this chapter:
               (1)  Subchapter A, except Section 348.0091 or unless
  expressly stated otherwise;
               (2)  Subchapter B, except Sections 348.102 and 348.123;
               (3)  Subchapter C, except Sections 348.204(b),
  348.206, 348.209, and 348.210;
               (4)  Subchapter D;
               (5)  Subchapter E, except Sections 348.404(d) and
  348.407; and
               (6)  Subchapter F, except Sections 348.504(a)(2),
  348.514, 348.516, and 348.517.
         SECTION 3.  Subchapter A, Chapter 348, Finance Code, is
  amended by adding Section 348.0091 to read as follows:
         Sec. 348.0091.  DISCLOSURE OF EQUITY IN TRADE-IN MOTOR
  VEHICLE. (a) A retail seller may not accept a trade-in motor
  vehicle for a motor vehicle sold under a retail installment
  contract unless the retail seller provides to the retail buyer,
  before the buyer signs the contract, a completed disclosure of
  trade-in equity form prescribed by this section.
         (b)  The finance commission shall by rule adopt a standard
  form for the disclosure of the equity in a retail buyer's trade-in
  motor vehicle.
         (c)  The form adopted by the finance commission under
  Subsection (b), at a minimum, must:
               (1)  contain:
                     (A)  the name of the retail buyer;
                     (B)  the name, address, and telephone number of
  the retail seller;
                     (C)  the make, model, year, and vehicle
  identification number of the trade-in motor vehicle;
                     (D)  the date of the retail installment
  transaction;
                     (E)  the amount offered by the retail seller to
  the retail buyer for the trade-in motor vehicle;
                     (F)  the amount the retail buyer owes on the
  trade-in motor vehicle as of the date of the retail installment
  transaction;
                     (G)  a statement indicating whether the retail
  buyer's equity in the trade-in motor vehicle is positive or
  negative;
                     (H)  a disclosure containing substantially
  similar words to the following: "If the EQUITY amount is NEGATIVE,
  the value the retail seller is offering you for your trade-in motor
  vehicle is less than what you currently owe on your trade-in. The
  amount of negative equity may be further reduced by the amount of
  any cash down payment and manufacturer's rebate and may be included
  in the amount financed under your retail installment contract as an
  itemized charge.";
                     (I)  the cash price of the vehicle being purchased
  under the retail installment transaction; and
                     (J)  the amount financed under the retail
  installment contract;
               (2)  include a space for the signature of both the
  retail seller and retail buyer and the printed name of the retail
  seller; and
               (3)  be signed and dated by the retail seller and retail
  buyer.
         (d)  The retail seller is solely responsible for the content
  and delivery of the disclosure form required by Subsection (a). An
  assignee of a retail installment contract may not be held
  responsible for a retail seller's failure to comply with the
  requirements of this section.
         (e)  This section does not create a private right of action.
  The commissioner has exclusive jurisdiction to enforce this
  section.
         SECTION 4.  Section 348.004(a), Finance Code, is amended to
  read as follows:
         (a)  The cash price is the price at which the retail seller
  offers in the ordinary course of business to sell for cash the goods
  or services that are subject to the transaction. An advertised
  price does not necessarily establish a cash price.
         SECTION 5.  Sections 348.104(b), (c), (d), and (h), Finance
  Code, are amended to read as follows:
         (b)  The add-on charge is $7.50 per $100 per year on the
  principal balance for[:
               [(1)]  a new [domestic] motor vehicle, other than a
  heavy commercial vehicle, designated by the manufacturer by a model
  year that is not earlier than the year in which the sale is made[; or
               [(2)     a new foreign motor vehicle, other than a heavy
  commercial vehicle].
         (c)  The add-on charge is $10 per $100 per year on the
  principal balance for:
               (1)  a new [domestic] motor vehicle not covered by
  Subsection (b);
               (2)  a used [domestic] motor vehicle designated by the
  manufacturer by a model year that is not more than two years before
  the year in which the sale is made; or
               (3)  [a used foreign motor vehicle that is not more than
  two years old; or
               [(4)]  a new or used heavy commercial vehicle
  designated by the manufacturer by a model year that is not more than
  two years before the year in which the sale is made [old].
         (d)  The add-on charge is $12.50 per $100 per year on the
  principal balance for a used motor vehicle not covered by
  Subsection (c) that is[:
               [(1)]  a [domestic] motor vehicle designated by the
  manufacturer by a model year that is not more than four years before
  the year in which the sale is made[; or
               [(2)     a foreign motor vehicle that is not more than four
  years old].
         (h)  For the purpose of a computation under this section, 16
  [15] or more days of a month may be considered a full month.
         SECTION 6.  Section 348.404, Finance Code, is amended by
  amending Subsection (b) and adding Subsection (d) to read as
  follows:
         (b)  A retail seller, in connection with a retail installment
  transaction, may:
               (1)  advance money to retire:
                     (A)  an amount owed against a motor vehicle used
  as a trade-in or a motor vehicle owned by the buyer that has been
  declared a total loss by the buyer's insurer; or
                     (B)  the retail buyer's outstanding obligation
  under a motor vehicle lease contract, a credit transaction for the
  purchase of a motor vehicle, or another retail installment
  transaction; and
               (2)  finance repayment of that money in a retail
  installment contract.
         (d)  A retail seller may include money advanced under
  Subsection (b) in the retail installment contract only if it is
  included as an itemized charge and may disclose money advanced
  under Subsection (b) in any manner permitted by 12 C.F.R. Part 226
  (Regulation Z) adopted under the Truth in Lending Act (15 U.S.C.
  Section 1601 et seq.). Section 349.003 does not apply to this
  subsection. This subsection does not create a private right of
  action. The commissioner has exclusive jurisdiction to enforce
  this subsection.
         SECTION 7.  Section 348.408, Finance Code, is amended by
  adding Subsection (c) to read as follows:
         (c)  A retail seller must pay in full the outstanding balance
  of a vehicle traded in not later than the 25th day after the date
  that:
               (1)  the retail installment contract is signed by the
  retail buyer and the retail buyer receives delivery of the motor
  vehicle; and
               (2)  the retail seller receives delivery of the motor
  vehicle traded in and the necessary and appropriate documents to
  transfer title from the buyer.
         SECTION 8.  Section 348.501, Finance Code, is amended by
  amending Subsection (b) and adding Subsection (c) to read as
  follows:
         (b)  A person who is required to hold a license under this
  chapter must ensure that each office at which retail installment
  transactions are made, serviced, held, or collected under this
  chapter is licensed or otherwise authorized to make, service, hold,
  or collect retail installment transactions in accordance with this
  chapter and rules implementing this chapter.
         (c)  A person may not use any device, subterfuge, or pretense
  to evade the application of this section.
         SECTION 9.  Section 348.513(a), Finance Code, is amended to
  read as follows:
         (a)  The finance commission may adopt rules to:
               (1)  enforce this chapter; or
               (2)  modify the standard form as required by Section
  348.0091 to:
                     (A)  conform to the provisions of the Truth in
  Lending Act (15 U.S.C. Section 1601 et seq.) or a regulation issued
  under authority of that Act;
                     (B)  address any official commentary or other
  interpretation by a federal agency relating to the Truth in Lending
  Act (15 U.S.C. Section 1601 et seq.) or a regulation issued under
  authority of that Act; or
                     (C)  address a judicial interpretation by a state
  or federal court relating to the Truth in Lending Act (15 U.S.C.
  Section 1601 et seq.) or a regulation issued under authority of that
  Act.
         SECTION 10.  Sections 348.514(c) and (d), Finance Code, are
  amended to read as follows:
         (c)  During an examination or investigation the commissioner
  or the commissioner's representative may administer oaths and
  examine any person under oath on any subject pertinent to a matter
  that the commissioner is authorized or required to consider,
  investigate, or secure information about under this chapter.
         (d)  All information relating to the examination or
  investigation process [Information obtained under this section] is
  confidential, including:
               (1)  information obtained from the license holder;
               (2)  the examination report;
               (3)  instructions and attachments; and
               (4)  correspondence between the license holder and the
  commissioner or the commissioner's representative relating to an
  examination or investigation of the license holder.
         SECTION 11.  The heading to Section 348.517, Finance Code,
  is amended to read as follows:
         Sec. 348.517.  LICENSE HOLDER'S RECORDS; DOCUMENT RETENTION
  REQUIREMENTS.
         SECTION 12.  Section 348.517(b), Finance Code, is amended to
  read as follows:
         (b)  A license holder shall keep the record until the later
  of:
               (1)  the fourth [third] anniversary of the date of the
  [last payment was made on the] retail installment transaction; or
               (2)  the second anniversary of the date on which the
  final entry is made in the record.
         SECTION 13.  (a) As soon as practicable after the effective
  date of this Act, the Finance Commission of Texas shall adopt the
  form required by Section 348.0091, Finance Code, as added by this
  Act.
         (b)  Notwithstanding Section 348.0091, Finance Code, as
  added by this Act, a retail seller is not required to comply with
  that section until the Finance Commission of Texas prescribes the
  form required by that section.
         SECTION 14.  (a)  Except as provided by Subsection (b) of
  this section, this Act takes effect September 1, 2009.
         (b)  Section 348.007, Finance Code, as amended by this Act,
  takes effect only if House Bill 4361 or Senate Bill 1965, proposed
  by the 81st Legislature, Regular Session, 2009, relating to the
  regulation of retail installment contracts for commercial
  vehicles, is passed and becomes law. If neither bill becomes law,
  the change in law made by this Act to Section 348.007, Finance Code,
  has no effect.
 
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