| |
| |
|
|
A BILL TO BE ENTITLED
|
|
|
AN ACT
|
|
|
relating to certain restrictions on deferred presentment |
|
|
transactions and motor vehicle certificate of title loans that a |
|
|
credit services organization obtains for a consumer or assists a |
|
|
consumer in obtaining. |
|
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
|
SECTION 1. Chapter 393, Finance Code, is amended by adding |
|
|
Subchapter H to read as follows: |
|
|
SUBCHAPTER H. CERTAIN EXTENSIONS OF CONSUMER CREDIT OBTAINED BY |
|
|
CERTAIN CREDIT SERVICES ORGANIZATIONS |
|
|
Sec. 393.651. DEFINITIONS. In this subchapter: |
|
|
(1) "Commissioner" means the consumer credit |
|
|
commissioner. |
|
|
(2) "Credit access business" means a credit services |
|
|
organization that obtains for a consumer or assists a consumer in |
|
|
obtaining an extension of consumer credit in the form of a deferred |
|
|
presentment transaction or a motor vehicle certificate of title |
|
|
loan. |
|
|
(3) "Deferred presentment transaction" has the |
|
|
meaning assigned by Section 341.001. |
|
|
(4) "Finance commission" means the Finance Commission |
|
|
of Texas. |
|
|
(5) "Motor vehicle certificate of title loan" means a |
|
|
loan in which a motor vehicle certificate of title is given as |
|
|
security for the loan. The term does not include a retail |
|
|
installment transaction under Chapter 348 or another loan made to |
|
|
finance the purchase of a motor vehicle. |
|
|
(6) "Office" means the Office of Consumer Credit |
|
|
Commissioner. |
|
|
Sec. 393.652. APPLICABILITY. This subchapter applies only |
|
|
to an extension of consumer credit in the form of a deferred |
|
|
presentment transaction or motor vehicle certificate of title loan |
|
|
that a credit access business obtains for a consumer or that a |
|
|
credit access business assists a consumer in obtaining. |
|
|
Sec. 393.653. PAYMENT FOR CERTAIN EXTENSIONS OF CONSUMER |
|
|
CREDIT. (a) An extension of consumer credit to which this |
|
|
subchapter applies must be payable in two-week or one-month |
|
|
increments or payable in a single payment. |
|
|
(b) A credit access business may not obtain or assist in |
|
|
obtaining for a consumer an extension of consumer credit in the form |
|
|
of a deferred presentment transaction or motor vehicle certificate |
|
|
of title loan for which partial payment of the principal amount is |
|
|
not accepted. |
|
|
Sec. 393.654. ADVANCE AMOUNT RESTRICTED. (a) The cash |
|
|
advanced under an extension of consumer credit that is in the form |
|
|
of a deferred presentment transaction may not exceed: |
|
|
(1) 25 percent of the borrower's gross monthly family |
|
|
income, if the borrower's gross monthly family income is not more |
|
|
than 100 percent of the federal poverty level for a family of four; |
|
|
or |
|
|
(2) 32 percent of the borrower's gross monthly family |
|
|
income, if the borrower's gross monthly family income exceeds 100 |
|
|
percent of the federal poverty level for a family of four. |
|
|
(b) The cash advanced under an extension of consumer credit |
|
|
that is in the form of a motor vehicle certificate of title loan may |
|
|
not exceed the lesser of: |
|
|
(1) as applicable, either: |
|
|
(A) three percent of the borrower's gross annual |
|
|
family income, if the borrower's gross annual family income is not |
|
|
more than 100 percent of the federal poverty level for a family of |
|
|
four; or |
|
|
(B) five percent of the borrower's gross annual |
|
|
family income, if the borrower's gross annual family income exceeds |
|
|
100 percent of the federal poverty level for a family of four; or |
|
|
(2) 70 percent of the retail value of the motor |
|
|
vehicle. |
|
|
(c) A credit access business shall keep a record of the |
|
|
document used to establish a borrower's family income under this |
|
|
section. A credit access business may use an affidavit signed by |
|
|
the borrower to establish the borrower's family income if a |
|
|
paycheck or other documentation establishing income is |
|
|
unavailable. An affidavit used for purposes of this subsection |
|
|
must state in bold letters the applicable advance limits provided |
|
|
by this section. |
|
|
Sec. 393.655. RENEWAL OR REFINANCE. For purposes of this |
|
|
subchapter, an extension of consumer credit described by Section |
|
|
393.652 that is made by a person to a consumer not later than the |
|
|
seventh day after a previous extension of consumer credit made by |
|
|
the same person is paid by the consumer is considered to be a |
|
|
renewal or refinance of the previous extension of credit. |
|
|
Sec. 393.656. RESTRICTIONS APPLICABLE TO EXTENSIONS OF |
|
|
CONSUMER CREDIT SECURED BY CERTIFICATE OF TITLE. (a) This section |
|
|
applies only to an extension of consumer credit in the form of a |
|
|
motor vehicle certificate of title loan. |
|
|
(b) The extension of consumer credit may not be refinanced |
|
|
or renewed or payable in installments more than: |
|
|
(1) five times, if the debt is payable monthly or has a |
|
|
term of one month; or |
|
|
(2) eight times, if the debt is payable biweekly, or |
|
|
has a term of two weeks. |
|
|
(c) For purposes of Subsection (b), the charging of a fee on |
|
|
late payment of the debt or on failure to make a payment is |
|
|
considered to be a refinance of the extension of consumer credit. |
|
|
(d) A credit access business may obtain for a consumer or |
|
|
assist a consumer in obtaining an extended repayment plan for the |
|
|
extension of consumer credit if the debt is not paid in full after |
|
|
the applicable number of refinances, renewals, or installment |
|
|
payments provided by Subsection (b), but may not charge the |
|
|
consumer fees in connection with the making of payments of |
|
|
principal and interest under an extended repayment plan. |
|
|
(e) A single consumer may enter into only one extended |
|
|
repayment plan in a 14-month period with respect to an extension of |
|
|
consumer credit to which this section applies. If a credit access |
|
|
business enters into an agreement to obtain or assist in the |
|
|
obtaining of an extension of consumer credit with a consumer who |
|
|
during the preceding 14 months has entered into an extended |
|
|
repayment plan with respect to the debt and obtains for the consumer |
|
|
or assists the consumer in obtaining extensions of consumer credit |
|
|
in the form of refinances, renewals, or installment payments of the |
|
|
extension up to the maximum limits provided by Subsection (b), the |
|
|
lender has forfeited any claim to the principal amount of the debt |
|
|
and must return the certificate of title to the consumer. |
|
|
(f) An extended repayment plan must provide for four equal |
|
|
or nearly equal payments of principal and interest, with all |
|
|
principal and interest to be paid in full in the fourth payment. |
|
|
The intervals between payments must be the same as the initial term |
|
|
of the original extension of consumer credit. A borrower is |
|
|
considered to have defaulted if the borrower fails to make any |
|
|
scheduled payment under the extended repayment plan. |
|
|
(g) A credit access business may seek reimbursement from a |
|
|
consumer on behalf of a lender for reasonable and documented costs |
|
|
and fees in association with the sale of a vehicle surrendered in |
|
|
connection with the consumer's default on a debt, except to the |
|
|
extent limited or prohibited by finance commission rule. The |
|
|
finance commission by rule may limit or prohibit unreasonable fees |
|
|
associated with the cost of selling such a vehicle. Notwithstanding |
|
|
any other provision of law, the proceeds of the sale of a motor |
|
|
vehicle, the certificate of title of which is given as security for |
|
|
an extension of consumer credit under this section, shall satisfy |
|
|
all outstanding and unpaid indebtedness under that extension of |
|
|
credit, and the borrower is not liable for any deficiency resulting |
|
|
from the sale. The lender shall pay to the borrower any surplus |
|
|
arising from the sale, as required by Chapter 9, Business & Commerce |
|
|
Code. |
|
|
(h) The finance commission by rule may require that an |
|
|
automobile club membership offer made in connection with an |
|
|
extension of consumer credit to which this section applies be |
|
|
accompanied by a disclaimer plainly stating the benefits and |
|
|
limitations of the offer and that the customer's signature must be |
|
|
present on any contract documenting the customer's agreement to |
|
|
purchase an automobile club membership. |
|
|
(i) It is a violation of this chapter to fail to return the |
|
|
motor vehicle certificate of title after an extension of consumer |
|
|
credit to which this section applies is paid in full. |
|
|
Sec. 393.657. RESTRICTIONS APPLICABLE TO DEFERRED |
|
|
PRESENTMENT TRANSACTIONS. (a) This section applies only to an |
|
|
extension of consumer credit in the form of a deferred presentment |
|
|
transaction. |
|
|
(b) The extension of consumer credit may not be refinanced |
|
|
or renewed or payable in installments more than: |
|
|
(1) four times, if the debt is payable monthly or has a |
|
|
term of one month; or |
|
|
(2) six times, if the debt is payable biweekly, or has |
|
|
a term of two weeks. |
|
|
(c) For purposes of Subsection (b), the charging of a fee on |
|
|
late payment of the debt or on failure to make a payment is |
|
|
considered to be a refinance of the extension of consumer credit. |
|
|
(d) A credit access business may obtain for a consumer or |
|
|
assist a consumer in obtaining an extended repayment plan if the |
|
|
extension of consumer credit under this section is not paid in full |
|
|
after the applicable number of refinances, renewals, or installment |
|
|
payments provided by Subsection (b), but may not charge the |
|
|
consumer fees in connection with the making of payments of |
|
|
principal and interest to a lender under an extended repayment |
|
|
plan. |
|
|
(e) A single consumer may enter into only one extended |
|
|
repayment plan in a 12-month period with respect to an extension of |
|
|
consumer credit to which this section applies. If a credit access |
|
|
business enters into an agreement to obtain or assist in the |
|
|
obtaining of an extension of consumer credit with a consumer who |
|
|
during the preceding 12 months has entered into an extended |
|
|
repayment plan with respect to the debt and obtains for the consumer |
|
|
or assists the consumer in obtaining extensions of consumer credit |
|
|
in the form of refinances, renewals, or installment payments of the |
|
|
debt up to the maximum limit provided by Subsection (b), the person |
|
|
making the cash advance has forfeited any claim to the principal |
|
|
amount of the debt. |
|
|
(f) An extended repayment plan must provide for four equal |
|
|
or nearly equal payments of principal and interest, with all |
|
|
principal and interest to be paid in full in the fourth payment. |
|
|
The intervals between payments must be the same as the initial term |
|
|
of the original extension of consumer credit. A borrower is |
|
|
considered to have defaulted if the borrower fails to make any |
|
|
scheduled payment under the extended repayment plan. |
|
|
SECTION 2. This Act takes effect September 1, 2011. |