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A BILL TO BE ENTITLED
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AN ACT
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relating to restrictions on amounts, fees, renewals, and payment of |
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deferred presentment transactions and certain loans secured by |
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motor vehicle certificates of title. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subchapter M, Chapter 342, Finance Code, is |
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amended by adding Sections 342.607, 342.608, and 342.609 to read as |
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follows: |
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Sec. 342.607. ADVANCED AMOUNT RESTRICTED. An authorized |
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lender may not enter into a deferred presentment transaction in |
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which the amount of cash advanced exceeds the lesser of: |
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(1) $2,000; or |
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(2) 35 percent of the borrower's gross monthly income. |
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Sec. 342.608. REAUTHORIZATION. (a) In this section, |
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"consecutive reauthorization" means a transaction in which a |
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borrower refinances or pays all or part of the finance charges and |
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advance of a deferred presentment transaction with a new deferred |
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presentment transaction. |
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(b) An authorized lender may not make more than three |
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consecutive reauthorizations of a deferred presentment |
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transaction. |
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Sec. 342.609. ACCEPTANCE OF PARTIAL PAYMENT. (a) An |
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authorized lender shall accept partial payment of an amount owed |
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under a deferred presentment transaction and shall apply any |
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partial payment to the principal amount owed. |
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(b) On payment of 25 percent or more of the principal amount |
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owed under a deferred presentment transaction, the lender may not |
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charge additional fees or other charges related to the transaction. |
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(c) This section does not: |
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(1) prohibit a lender from charging interest |
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authorized by law and the deferred presentment transaction |
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agreement; or |
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(2) require a lender to accept a final payment that |
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does not include the total amount of interest owed to the lender. |
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SECTION 2. Chapter 342, Finance Code, is amended by adding |
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Subchapter N to read as follows: |
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SUBCHAPTER N. MOTOR VEHICLE CERTIFICATE OF TITLE LOANS |
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Sec. 342.651. DEFINITION. In this subchapter, "motor |
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vehicle certificate of title loan" means a loan in which a motor |
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vehicle certificate of title is given by the borrower as security |
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for the loan. The term does not include a retail installment |
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transaction under Chapter 348 or another loan made to finance the |
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purchase of a motor vehicle. |
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Sec. 342.652. LOAN AMOUNT RESTRICTED. An authorized lender |
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may not make a motor vehicle certificate of title loan in an amount |
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that exceeds the lesser of: |
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(1) $2,500; or |
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(2) 50 percent of the borrower's gross monthly income. |
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Sec. 342.653. REAUTHORIZATION OF LOAN. (a) In this |
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section, "consecutive reauthorization" means a transaction in |
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which a borrower refinances or pays all or part of the finance |
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charges and advance under a loan with a new loan. |
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(b) An authorized lender may not make more than three |
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consecutive reauthorizations of a motor vehicle certificate of |
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title loan. |
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Sec. 342.654. ACCEPTANCE OF PARTIAL PAYMENT. (a) An |
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authorized lender shall accept partial payment of a motor vehicle |
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certificate of title loan and shall apply any partial payment to the |
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principal amount of the loan. |
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(b) On payment of 33 percent or more of the loan principal, |
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the lender may not charge additional fees related to the loan. |
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(c) This section does not: |
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(1) prohibit a lender from charging interest |
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authorized by law and the loan agreement; or |
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(2) require a lender to accept a final payment that |
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does not include the total amount of interest owed to the lender. |
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SECTION 3. Chapter 393, Finance Code, is amended by adding |
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Subchapters D-1 and D-2 to read as follows: |
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SUBCHAPTER D-1. RESTRICTIONS RELATING TO MOTOR VEHICLE |
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CERTIFICATES OF TITLE |
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Sec. 393.351. APPLICABILITY OF SUBCHAPTER. This subchapter |
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does not apply to an extension of consumer credit for the express |
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purpose of financing the purchase of a motor vehicle used as |
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security for the debt. |
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Sec. 393.352. DEBT AMOUNT RESTRICTED. A credit services |
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organization may not obtain, facilitate, or otherwise assist in |
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obtaining for a consumer an extension of consumer credit in which a |
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motor vehicle certificate of title is given by the consumer as |
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security for the debt that is in an amount that exceeds the lesser |
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of: |
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(1) $2,500; or |
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(2) 50 percent of the consumer's gross monthly income. |
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Sec. 393.353. REAUTHORIZATION OF DEBT. (a) In this |
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section, "consecutive reauthorization" means a transaction in |
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which a consumer refinances or pays all or part of any finance |
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charges and advance under an extension of consumer credit with a new |
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extension of consumer credit. |
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(b) A credit services organization may not obtain, |
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facilitate, or otherwise assist in obtaining for a consumer more |
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than three consecutive reauthorizations of an extension of consumer |
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credit in which a motor vehicle certificate of title is given by the |
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consumer as security for the debt. |
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Sec. 393.354. ACCEPTANCE OF PARTIAL PAYMENT BY LENDER. (a) |
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A credit services organization may not obtain, facilitate, or |
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otherwise assist in obtaining for a consumer an extension of |
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consumer credit in which a motor vehicle certificate of title is |
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given by the consumer as security for the debt and for which partial |
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payment of the principal amount is not accepted. |
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(b) On payment of 33 percent or more of the principal amount |
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of the extension of consumer credit described by this section, the |
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credit services organization may not charge the consumer additional |
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fees related to the extension of consumer credit. |
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SUBCHAPTER D-2. RESTRICTIONS RELATING TO DEFERRED |
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PRESENTMENT TRANSACTIONS |
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Sec. 393.371. DEFINITION. In this subchapter, "deferred |
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presentment transaction" has the meaning assigned by Section |
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341.001. |
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Sec. 393.372. DEBT AMOUNT RESTRICTED. A credit services |
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organization may not obtain, facilitate, or otherwise assist in |
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obtaining for a consumer an extension of consumer credit in the form |
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of a deferred presentment transaction that is in an amount that |
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exceeds the lesser of: |
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(1) $2,000; or |
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(2) 35 percent of the consumer's gross monthly income. |
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Sec. 393.373. REAUTHORIZATION OF DEBT. (a) In this |
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section, "consecutive reauthorization" means a transaction in |
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which a consumer refinances or pays all or part of any finance |
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charges and advance under an extension of consumer credit with a new |
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extension of consumer credit. |
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(b) A credit services organization may not obtain, |
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facilitate, or otherwise assist in obtaining for a consumer more |
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than three consecutive reauthorizations of an extension of consumer |
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credit in the form of a deferred presentment transaction. |
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Sec. 393.374. ACCEPTANCE OF PARTIAL PAYMENT BY LENDER. (a) |
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A credit services organization may not obtain, facilitate, or |
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otherwise assist in obtaining for a consumer an extension of |
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consumer credit in the form of a deferred presentment transaction |
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for which partial payment of the principal amount is not accepted. |
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(b) On payment of 25 percent or more of the principal amount |
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of the extension of consumer credit described by this section, the |
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credit services organization may not charge the consumer additional |
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fees or other charges related to the extension of consumer credit. |
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SECTION 4. This Act takes effect September 1, 2011. |