82R13499 ATP-D

By: Truitt H.B. No. 2593

A BILL TO BE ENTITLED

AN ACT

relating to restrictions on amounts, fees, renewals, and payment of deferred presentment transactions and certain loans secured by motor vehicle certificates of title.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter M, Chapter 342, Finance Code, is amended by adding Sections 342.607, 342.608, and 342.609 to read as follows:

Sec. 342.607. ADVANCED AMOUNT RESTRICTED. An authorized lender may not enter into a deferred presentment transaction in which the amount of cash advanced exceeds the lesser of:

(1) $2,000; or

(2) 35 percent of the borrower's gross monthly income.

Sec. 342.608. REAUTHORIZATION. (a) In this section, "consecutive reauthorization" means a transaction in which a borrower refinances or pays all or part of the finance charges and advance of a deferred presentment transaction with a new deferred presentment transaction.

(b) An authorized lender may not make more than three consecutive reauthorizations of a deferred presentment transaction.

Sec. 342.609. ACCEPTANCE OF PARTIAL PAYMENT. (a) An authorized lender shall accept partial payment of an amount owed under a deferred presentment transaction and shall apply any partial payment to the principal amount owed.

(b) On payment of 25 percent or more of the principal amount owed under a deferred presentment transaction, the lender may not charge additional fees or other charges related to the transaction.

(c) This section does not:

(1) prohibit a lender from charging interest authorized by law and the deferred presentment transaction agreement; or

(2) require a lender to accept a final payment that does not include the total amount of interest owed to the lender.

SECTION 2. Chapter 342, Finance Code, is amended by adding Subchapter N to read as follows:

SUBCHAPTER N. MOTOR VEHICLE CERTIFICATE OF TITLE LOANS

Sec. 342.651. DEFINITION. In this subchapter, "motor vehicle certificate of title loan" means a loan in which a motor vehicle certificate of title is given by the borrower 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.

Sec. 342.652. LOAN AMOUNT RESTRICTED. An authorized lender may not make a motor vehicle certificate of title loan in an amount that exceeds the lesser of:

(1) $2,500; or

(2) 50 percent of the borrower's gross monthly income.

Sec. 342.653. REAUTHORIZATION OF LOAN. (a) In this section, "consecutive reauthorization" means a transaction in which a borrower refinances or pays all or part of the finance charges and advance under a loan with a new loan.

(b) An authorized lender may not make more than three consecutive reauthorizations of a motor vehicle certificate of title loan.

Sec. 342.654. ACCEPTANCE OF PARTIAL PAYMENT. (a) An authorized lender shall accept partial payment of a motor vehicle certificate of title loan and shall apply any partial payment to the principal amount of the loan.

(b) On payment of 33 percent or more of the loan principal, the lender may not charge additional fees related to the loan.

(c) This section does not:

(1) prohibit a lender from charging interest authorized by law and the loan agreement; or

(2) require a lender to accept a final payment that does not include the total amount of interest owed to the lender.

SECTION 3. Chapter 393, Finance Code, is amended by adding Subchapters D-1 and D-2 to read as follows:

SUBCHAPTER D-1. RESTRICTIONS RELATING TO MOTOR VEHICLE

CERTIFICATES OF TITLE

Sec. 393.351. APPLICABILITY OF SUBCHAPTER. This subchapter does not apply to an extension of consumer credit for the express purpose of financing the purchase of a motor vehicle used as security for the debt.

Sec. 393.352. DEBT AMOUNT RESTRICTED. A credit services organization may not obtain, facilitate, or otherwise assist in obtaining for a consumer an extension of consumer credit in which a motor vehicle certificate of title is given by the consumer as security for the debt that is in an amount that exceeds the lesser of:

(1) $2,500; or

(2) 50 percent of the consumer's gross monthly income.

Sec. 393.353. REAUTHORIZATION OF DEBT. (a) In this section, "consecutive reauthorization" means a transaction in which a consumer refinances or pays all or part of any finance charges and advance under an extension of consumer credit with a new extension of consumer credit.

(b) A credit services organization may not obtain, facilitate, or otherwise assist in obtaining for a consumer more than three consecutive reauthorizations of an extension of consumer credit in which a motor vehicle certificate of title is given by the consumer as security for the debt.

Sec. 393.354. ACCEPTANCE OF PARTIAL PAYMENT BY LENDER. (a) A credit services organization may not obtain, facilitate, or otherwise assist in obtaining for a consumer an extension of consumer credit in which a motor vehicle certificate of title is given by the consumer as security for the debt and for which partial payment of the principal amount is not accepted.

(b) On payment of 33 percent or more of the principal amount of the extension of consumer credit described by this section, the credit services organization may not charge the consumer additional fees related to the extension of consumer credit.

SUBCHAPTER D-2. RESTRICTIONS RELATING TO DEFERRED

PRESENTMENT TRANSACTIONS

Sec. 393.371. DEFINITION. In this subchapter, "deferred presentment transaction" has the meaning assigned by Section 341.001.

Sec. 393.372. DEBT AMOUNT RESTRICTED. A credit services organization may not obtain, facilitate, or otherwise assist in obtaining for a consumer an extension of consumer credit in the form of a deferred presentment transaction that is in an amount that exceeds the lesser of:

(1) $2,000; or

(2) 35 percent of the consumer's gross monthly income.

Sec. 393.373. REAUTHORIZATION OF DEBT. (a) In this section, "consecutive reauthorization" means a transaction in which a consumer refinances or pays all or part of any finance charges and advance under an extension of consumer credit with a new extension of consumer credit.

(b) A credit services organization may not obtain, facilitate, or otherwise assist in obtaining for a consumer more than three consecutive reauthorizations of an extension of consumer credit in the form of a deferred presentment transaction.

Sec. 393.374. ACCEPTANCE OF PARTIAL PAYMENT BY LENDER. (a) A credit services organization may not obtain, facilitate, or otherwise assist in obtaining for a consumer an extension of consumer credit in the form of a deferred presentment transaction for which partial payment of the principal amount is not accepted.

(b) On payment of 25 percent or more of the principal amount of the extension of consumer credit described by this section, the credit services organization may not charge the consumer additional fees or other charges related to the extension of consumer credit.

SECTION 4. This Act takes effect September 1, 2011.