|
|
A BILL TO BE ENTITLED
|
|
AN ACT
|
|
relating to extensions of consumer credit a credit services |
|
organization obtains for a consumer or assists a consumer in |
|
obtaining; providing a civil penalty. |
|
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
|
SECTION 1. Section 393.001, Finance Code, is amended by |
|
amending Subdivision (3) and adding Subdivisions (3-a) and (5) to |
|
read as follows: |
|
(3) "Credit services organization" means a person who |
|
provides, or represents that the person can or will provide, for the |
|
payment of valuable consideration any of the following services |
|
with respect to the extension of consumer credit by others: |
|
(A) improving a consumer's credit history or |
|
rating; |
|
(B) obtaining an extension of consumer credit for |
|
a consumer in the form of a deferred presentment transaction or |
|
motor vehicle title loan; or |
|
(C) providing advice or assistance to a consumer |
|
with regard to Paragraph (A) or (B). |
|
(3-a) "Deferred presentment transaction" has the |
|
meaning assigned by Section 341.001. For purposes of this chapter, |
|
this definition does not preclude repayment in more than one |
|
installment. |
|
(5) "Motor vehicle title loan" means a loan in which an |
|
unencumbered motor vehicle 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. |
|
SECTION 2. Subchapter A, Chapter 393, Finance Code, is |
|
amended by adding Section 393.004 to read as follows: |
|
Sec. 393.004. LIMITATION ON EXTENSIONS OF CONSUMER CREDIT |
|
AND REFINANCING. (a) A credit services organization may not obtain |
|
for a consumer or assist a consumer in obtaining an extension of |
|
consumer credit in any form other than in the form of a deferred |
|
presentment transaction that meets the requirements of Section |
|
393.634 or 393.635, or a motor vehicle title loan that meets the |
|
requirements of Section 393.636 or 393.637. |
|
(b) Any refinance of an extension of consumer credit in the |
|
form of a deferred presentment transaction or motor vehicle title |
|
loan that a credit services organization obtains for a consumer or |
|
assists a consumer in obtaining: |
|
(1) must be authorized under Subchapter G; |
|
(2) may not advance additional cash to the consumer; |
|
and |
|
(3) must meet all the requirements under Subchapter G |
|
applicable to the original extension of consumer credit, except as |
|
specifically provided otherwise by an applicable provision of |
|
Subchapter G. |
|
SECTION 3. Section 393.201(c), Finance Code, is amended to |
|
read as follows: |
|
(c) A contract with a credit access business, as defined by |
|
Section 393.601, for the performance of services described by |
|
Section 393.602(a) must, in addition to the requirements of |
|
Subsection (b) and Section 393.302: |
|
(1) contain a statement that there is no prepayment |
|
penalty; |
|
(2) contain a statement that a credit access business |
|
must comply with Chapter 392 and the federal Fair Debt Collection |
|
Practices Act (15 U.S.C. Section 1692 et seq.) with respect to an |
|
extension of consumer credit [described by Section 393.602(a)]; |
|
(3) contain a statement that a person may not threaten |
|
or pursue criminal charges against a consumer related to a check or |
|
other debit authorization provided by the consumer as security for |
|
a transaction in the absence of forgery, fraud, theft, or other |
|
criminal conduct; |
|
(4) contain a statement that a credit access business |
|
must comply, to the extent applicable, with 10 U.S.C. Section 987 |
|
and any regulations adopted under that law with respect to an |
|
extension of consumer credit [described by Section 393.602(a)]; |
|
(5) disclose to the consumer: |
|
(A) the lender from whom the extension of |
|
consumer credit is obtained; |
|
(B) the interest paid or to be paid to the lender; |
|
and |
|
(C) the specific fees that will be paid to the |
|
credit access business for the business's services; and |
|
(6) contain the name and address of the Office of |
|
Consumer Credit Commissioner and the telephone number of the |
|
office's consumer helpline. |
|
SECTION 4. Section 393.203, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.203. ISSUANCE OF CONTRACT AND OTHER DOCUMENTS. |
|
(a) A credit services organization shall give to the consumer, when |
|
the document is signed, a copy of the completed contract and any |
|
other document the organization requires the consumer to sign. |
|
(b) The documents provided by a credit access business, as |
|
defined by Section 393.221, to a consumer under this section must be |
|
written in English, and Spanish if requested by the consumer or if |
|
the transaction is being completed in Spanish. If the consumer |
|
cannot read, the documents must be read aloud to the consumer before |
|
the consumer signs the documents. |
|
SECTION 5. Section 393.221, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.221. DEFINITION [DEFINITIONS]. In this |
|
subchapter, "credit access business" [:
|
|
[(1) "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 title loan]. |
|
[(2)
"Deferred presentment transaction" has the
|
|
meaning assigned by Section 341.001. For purposes of this chapter,
|
|
this definition does not preclude repayment in more than one
|
|
installment. The term is also referred to as a payday loan.
|
|
[(3)
"Motor vehicle title loan" or "auto title loan"
|
|
means a loan in which an unencumbered motor vehicle 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.] |
|
SECTION 6. Section 393.222, Finance Code, is amended by |
|
adding Subsection (a-1) to read as follows: |
|
(a-1) A credit access business shall post, in the same |
|
manner as a notice required under Subsection (a), and provide as a |
|
separate document to a consumer, a notice prescribed by the Finance |
|
Commission of Texas regarding the availability of extended payment |
|
plans that describes the parameters of the plans. |
|
SECTION 7. Section 393.223(a), Finance Code, is amended to |
|
read as follows: |
|
(a) Before performing services described by Section 393.221 |
|
[393.221(1)], a credit access business must provide to a consumer a |
|
disclosure adopted by rule of the Finance Commission of Texas [that
|
|
discloses the following] in a form prescribed by the commission, |
|
and if requested by the consumer, a translation of the disclosure in |
|
Spanish, that: |
|
(1) discloses the interest, fees, and annual |
|
percentage rates, as applicable, to be charged on a deferred |
|
presentment transaction or on a motor vehicle title loan, as |
|
applicable, in comparison to interest, fees, and annual percentage |
|
rates to be charged on other alternative forms of consumer debt; |
|
(2) discloses the amount of accumulated fees a |
|
consumer would incur by renewing or refinancing a deferred |
|
presentment transaction or motor vehicle title loan that remains |
|
outstanding for a period of two weeks, one month, two months, and |
|
three months; [and] |
|
(3) provides information regarding the typical |
|
pattern of repayment of deferred presentment transactions and motor |
|
vehicle title loans; and |
|
(4) references consumer credit counseling agencies |
|
that provide financial education and training or cash assistance to |
|
borrowers. |
|
SECTION 8. Section 393.304, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.304. FALSE OR MISLEADING REPRESENTATION OR |
|
STATEMENT. A credit services organization or a representative of |
|
the organization may not: |
|
(1) make or use a false or misleading representation |
|
in the offer or sale of the services of the organization, |
|
including[:
|
|
[(A)] guaranteeing to "erase bad credit" or words |
|
to that effect unless the representation clearly discloses this can |
|
be done only if the credit history is inaccurate or obsolete[; and
|
|
[(B)
guaranteeing an extension of consumer
|
|
credit regardless of the person's credit history unless the
|
|
representation clearly discloses the eligibility requirements for
|
|
obtaining the extension]; or |
|
(2) make, or advise a consumer to make, a statement |
|
relating to a consumer's credit worthiness, credit standing, or |
|
credit capacity that the person knows, or should know by the |
|
exercise of reasonable care, to be false or misleading to a: |
|
(A) consumer reporting agency; or |
|
(B) person who has extended consumer credit to a |
|
consumer or to whom a consumer is applying for an extension of |
|
consumer credit. |
|
SECTION 9. Subchapter D, Chapter 393, Finance Code, is |
|
amended by adding Section 393.308 to read as follows: |
|
Sec. 393.308. PROHIBITION ON OBTAINING CERTAIN LOANS OR |
|
EXTENSIONS OF CREDIT. A credit services organization may not: |
|
(1) obtain for a consumer or assist a consumer in |
|
obtaining a loan or other extension of credit that is not in the |
|
form of a deferred presentment transaction or motor vehicle title |
|
loan; or |
|
(2) charge or receive from a consumer a fee or other |
|
valuable consideration in connection with a loan or other extension |
|
of credit that is not a deferred presentment transaction or motor |
|
vehicle title loan. |
|
SECTION 10. Section 393.601(2), Finance Code, is amended to |
|
read as follows: |
|
(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 title loan]. |
|
SECTION 11. Section 393.602, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.602. APPLICABILITY. (a) This subchapter applies |
|
only to a credit services organization that obtains for a consumer |
|
or assists a consumer in obtaining an extension of consumer credit |
|
[in the form of:
|
|
[(1) a deferred presentment transaction; or
|
|
[(2) a motor vehicle title loan]. |
|
(b) A credit access business may assess fees as agreed to |
|
between the parties for [its] services performed to obtain an |
|
extension of consumer credit for a consumer or assist a consumer in |
|
obtaining an extension of consumer credit and for services |
|
described by Section 393.001(3)(A) or (C) [as agreed to between the
|
|
parties]. A credit access business fee may be calculated daily, |
|
biweekly, monthly, or on another periodic basis. A credit access |
|
business is permitted to charge amounts allowed by other laws, as |
|
applicable. A fee may not be charged unless it is disclosed. |
|
(c) A person may not use a device, subterfuge, or pretense |
|
to evade the application of this subchapter. [A lawful transaction
|
|
governed under another statute, including Title 1, Business &
|
|
Commerce Code, does not violate this subsection and may not be
|
|
considered a device, subterfuge, or pretense to evade the
|
|
application of this subchapter.] |
|
SECTION 12. Section 393.604(a), Finance Code, is amended to |
|
read as follows: |
|
(a) An application for a license under this subchapter must: |
|
(1) be under oath; |
|
(2) give the approximate location from which the |
|
business is to be conducted; |
|
(3) identify the business's principal parties in |
|
interest; |
|
(4) contain the name, physical address, and telephone |
|
number of all third-party lender organizations: |
|
(A) with which the business contracts to provide |
|
services described by Section 393.602(a); or |
|
(B) from which the business arranges extensions |
|
of consumer credit [described by Section 393.602(a)]; and |
|
(5) contain other relevant information that the |
|
commissioner requires for the findings required under Section |
|
393.607. |
|
SECTION 13. Sections 393.622(a) and (b), Finance Code, are |
|
amended to read as follows: |
|
(a) The finance commission may: |
|
(1) adopt rules necessary to enforce and administer |
|
this subchapter; |
|
(2) adopt rules with respect to the quarterly |
|
reporting by a credit access business licensed under this |
|
subchapter of summary business information relating to extensions |
|
of consumer credit the business obtained for a consumer or assisted |
|
a consumer in obtaining [described by Section 393.602(a)]; and |
|
(3) adopt rules with respect to periodic examination |
|
by the office relating to extensions of consumer credit the |
|
business obtained for a consumer or assisted a consumer in |
|
obtaining [described by Section 393.602(a)], including rules |
|
related to charges for defraying the reasonable cost of conducting |
|
the examinations. |
|
(b) The finance commission may adopt rules under this |
|
section to allow the commissioner to review, as part of a periodic |
|
examination, any relevant contracts between the credit access |
|
business and the third-party lender organizations with which the |
|
credit access business contracts to provide services described by |
|
Section 393.602(a) or from which the business arranges extensions |
|
of consumer credit [described by Section 393.602(a)]. A contract |
|
or information obtained by the commissioner under this section is |
|
considered proprietary and confidential to the respective parties |
|
to the contract, and is not subject to disclosure under Chapter 552, |
|
Government Code. |
|
SECTION 14. Section 393.625, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.625. MILITARY BORROWERS. (a) An extension of |
|
consumer credit [described by Section 393.602(a)] that is obtained |
|
by a credit access business for a member of the United States |
|
military or a dependent of a member of the United States military or |
|
that the business assisted that person in obtaining must comply |
|
with 10 U.S.C. Section 987 and any regulations adopted under that |
|
law, to the extent applicable. |
|
(b) With respect to a consumer who is a "covered member" or a |
|
"dependent" of a covered member, as those terms are defined by 10 |
|
U.S.C. Section 987, the term of an extension of consumer credit, |
|
including all renewals and refinances, obtained for the consumer by |
|
a credit access business or that a credit access business assists |
|
the consumer in obtaining may not exceed 90 days. |
|
SECTION 15. Section 393.626, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.626. DEBT COLLECTION PRACTICES. A violation of |
|
Chapter 392 by a credit access business with respect to obtaining |
|
for a consumer or assisting a consumer in obtaining an extension of |
|
consumer credit [described by Section 393.602(a)] constitutes a |
|
violation of this subchapter. |
|
SECTION 16. Section 393.627, Finance Code, is amended to |
|
read as follows: |
|
Sec. 393.627. QUARTERLY REPORT TO COMMISSIONER. A credit |
|
access business shall file a quarterly report with the commissioner |
|
on a form prescribed by the commissioner that provides the |
|
following information relating to extensions of consumer credit |
|
[described by Section 393.602(a)] during the preceding quarter: |
|
(1) the number of consumers for whom the business |
|
obtained or assisted in obtaining [those] extensions of consumer |
|
credit; |
|
(2) the number of [those] extensions of consumer |
|
credit obtained by the business or that the business assisted |
|
consumers in obtaining; |
|
(3) the number of refinancing transactions of the |
|
extensions of consumer credit described by Subdivision (2); |
|
(4) the number of consumers refinancing the extensions |
|
of consumer credit described by Subdivision (2); |
|
(5) the number of consumers refinancing more than once |
|
the extensions of consumer credit described by Subdivision (2); |
|
(6) the average amount of the extensions of consumer |
|
credit described by Subdivision (2); |
|
(7) the total amount of fees charged by the business |
|
for the activities described by Subdivision (1); |
|
(8) the number of vehicles surrendered or repossessed |
|
under the terms of an extension of consumer credit in the form of a |
|
motor vehicle title loan obtained by the business or that the |
|
business assisted a consumer in obtaining; |
|
(9) the mean, median, and mode of the number of |
|
extensions of consumer credit obtained by consumers as a result of |
|
entering into the extensions of consumer credit described by |
|
Subdivision (2); and |
|
(10) any related information the commissioner |
|
determines necessary. |
|
SECTION 17. Subchapter G, Chapter 393, Finance Code, is |
|
amended by adding Sections 393.629, 393.630, 393.631, 393.632, |
|
393.634, 393.635, 393.636, 393.637, 393.638 and 393.639 to read as |
|
follows: |
|
Sec. 393.629. GENERAL LIMITATIONS ON EXTENSIONS OF CONSUMER |
|
CREDIT. (a) The term of an extension of consumer credit obtained |
|
for a consumer by a credit access business or that a credit access |
|
business assists a consumer in obtaining may not exceed 180 days. |
|
(b) For purposes of this section, an extension of consumer |
|
credit that is made to a consumer on or before the seventh day after |
|
the date the consumer has paid a previous extension of consumer |
|
credit made by the same person is considered a refinance or renewal |
|
of the previous debt. |
|
(c) Notwithstanding any other provision of law, the |
|
proceeds of the sale of a repossessed motor vehicle that secured an |
|
extension of consumer credit shall satisfy all outstanding and |
|
unpaid indebtedness under that extension of credit, and the |
|
consumer is not liable for any deficiency resulting from the sale |
|
unless the consumer has committed fraud in obtaining the extension |
|
of consumer credit. |
|
(d) Any fee charged to a consumer for the repossession of a |
|
motor vehicle given as security for an extension of consumer credit |
|
must be reasonable. |
|
(e) With a consumer's written consent, a debt incurred under |
|
an extension of consumer credit that a credit access business |
|
obtained for the consumer or assisted the consumer in obtaining may |
|
be sold to another credit access business licensed under this |
|
subchapter. All transaction limits applicable to the debt before |
|
the sale apply to the debt after the debt is sold, except that the |
|
term of the extension of consumer credit may not exceed 180 days, |
|
beginning on the date the debt is sold. The sale of a debt under |
|
this subsection is considered to be a refinance of the debt for |
|
purposes of the applicable transaction limits. |
|
(f) Before obtaining for a consumer or assisting a consumer |
|
in obtaining an extension of consumer credit, a credit access |
|
business shall consider the ability of the consumer to repay the |
|
debt within the term provided by law for the original extension of |
|
credit and any authorized renewal or refinance. |
|
(g) A credit access business may not obtain for a consumer |
|
or assist a consumer in obtaining an extension of consumer credit in |
|
the form of a deferred presentment transaction or motor vehicle |
|
title loan unless the loan contract provides that the lender must |
|
accept partial repayment of the principal balance of the loan from |
|
the consumer, with no additional fees or penalties, at any time |
|
during regular business hours. |
|
Sec. 393.630. LIMITATION ON OUTSTANDING DEBT. (a) A |
|
consumer may have only one outstanding debt from an extension of |
|
consumer credit that a credit access business obtained for the |
|
consumer or assisted the consumer in obtaining. |
|
(b) To obtain an extension of consumer credit facilitated |
|
through the services of a credit access business, a consumer must |
|
sign a written certification stating that the consumer: |
|
(1) at that time has no other outstanding debt from an |
|
extension of consumer credit that any credit access business |
|
obtained for the consumer or assisted the consumer in obtaining; |
|
(2) has not owed a debt subject to an extended payment |
|
plan that a credit access business obtained for the consumer or |
|
assisted the consumer in obtaining during the preceding 14 days; |
|
and |
|
(3) has not gone into default on a debt that a credit |
|
access business obtained for the consumer or assisted the consumer |
|
in obtaining during the preceding 30 days. |
|
(c) For purposes of Subsection (b)(3), a consumer is not |
|
considered in default if the consumer made a payment on a debt on or |
|
before the 10th day after the date the payment was due. |
|
(d) A credit access business shall in good faith verify that |
|
a consumer is not falsifying the certification required by |
|
Subsection (b), to the best knowledge and ability of the person |
|
acting on behalf of the credit access business for that |
|
transaction. |
|
(e) A person acting on behalf of a credit access business |
|
has satisfied the requirement of Subsection (d) if the person |
|
considers all information that the consumer shares with the person |
|
in negotiating the transaction and if the person makes a reasonable |
|
effort to verify the consumer's representations with any records |
|
that the credit access business typically consults in the normal |
|
course of its business. |
|
(f) A consumer who falsifies statements contained in the |
|
certification violates this section. |
|
(g) A credit access business or a consumer who violates this |
|
section is subject to a civil penalty in an amount not to exceed |
|
$1,000 for each violation. |
|
(h) The finance commission shall adopt rules to implement |
|
this section. |
|
Sec. 393.631. INSUFFICIENT FUNDS CHARGE. (a) This section |
|
applies to the presentation for payment of a personal check or |
|
authorization to debit a deposit account exchanged for a cash |
|
advance under a deferred presentment transaction that was obtained |
|
for a consumer by a credit access business or that a credit access |
|
business assisted a consumer in obtaining. |
|
(b) If there are insufficient funds in the account to pay |
|
the check or make the debit on the date the check or authorization |
|
to debit is presented in accordance with the terms of the deferred |
|
presentment transaction, the consumer may not be charged more than |
|
$25 in the aggregate, regardless of how many times presentation is |
|
made for payment on the account. |
|
(c) A credit access business may not present a check or |
|
authorization to debit more than twice without written consent of |
|
the consumer. |
|
Sec. 393.632. EXCESS PROCEEDS FROM SALE OF REPOSSESSED |
|
VEHICLE. A credit access business may not obtain for a consumer or |
|
assist a consumer in obtaining an extension of consumer credit in |
|
the form of a motor vehicle title loan unless the loan contract |
|
provides that if the vehicle securing the loan is repossessed and |
|
subsequently sold for a price that exceeds the amount that the |
|
consumer owes on the loan, the lender shall return to the consumer |
|
the excess amount. |
|
Sec. 393.634. SINGLE-PAYMENT DEFERRED PRESENTMENT |
|
TRANSACTION. (a) The principal amount of a cash advance made under |
|
an extension of consumer credit in the form of a single-payment |
|
deferred presentment transaction that a credit access business |
|
obtains for a consumer or assists a consumer in obtaining may not |
|
exceed 20 percent of the consumer's gross monthly income. |
|
(b) The term of an original or refinanced extension of |
|
consumer credit in the form of a single-payment deferred |
|
presentment transaction that a credit access business obtains for a |
|
consumer or assists a consumer in obtaining may not be less than 10 |
|
days. |
|
(c) An extension of consumer credit in the form of a |
|
single-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining may not be refinanced more than three times. |
|
(d) If a consumer has refinanced a single-payment deferred |
|
presentment transaction described by Subsection (c) three times: |
|
(1) the credit access business shall offer an extended |
|
payment plan to the consumer, unless the consumer has entered into |
|
two or more extended payment plans in the preceding 12 months; and |
|
(2) the consumer may request an extended payment plan |
|
at any time on or after the date the consumer refinances the |
|
single-payment deferred presentment transaction for the third time |
|
and on or before the date the deferred presentment transaction must |
|
be repaid in full. |
|
(e) The combined interest and fees for a deferred |
|
presentment transaction may not exceed 15 percent of the amount |
|
advanced. |
|
(f) An extended payment plan authorized by Subsection (d) |
|
must comply with Section 393.638. |
|
Sec. 393.635. MULTIPLE-PAYMENT DEFERRED PRESENTMENT |
|
TRANSACTION. (a) The sum of all scheduled payments due in a single |
|
month under an extension of consumer credit in the form of a |
|
multiple-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining may not exceed: |
|
(1) 15 percent of the consumer's gross monthly income, |
|
if the consumer's annual income is not more than 125 percent of the |
|
federal poverty level for a family of four; or |
|
(2) 20 percent of the consumer's gross monthly income, |
|
if the consumer is not described by Subdivision (1) and is not a |
|
military borrower to whom a different limit applies under federal |
|
law. |
|
(b) An extension of consumer credit in the form of a |
|
multiple-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining may not be payable by the consumer in more than 12 |
|
installments, and the loan agreement must specify the number, date, |
|
and total amount due with regard to each installment. |
|
(c) An extension of consumer credit in the form of a |
|
multiple-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining must be payable on a fully amortizing, declining |
|
principal balance basis with substantially equal payments. |
|
(d) The first installment of an extension of consumer credit |
|
in the form of a multiple-payment deferred presentment transaction |
|
that a credit access business obtains for a consumer or assists a |
|
consumer in obtaining may not be due before the 10th day after the |
|
date the consumer enters into the loan agreement. An installment |
|
may not be due before the 14th day or after the 31st day after the |
|
date a previous installment is due. |
|
(e) An extension of consumer credit in the form of a |
|
multiple-payment deferred presentment transaction that a credit |
|
access business obtains for a consumer or assists a consumer in |
|
obtaining may not be refinanced. |
|
Sec. 393.636. SINGLE-PAYMENT MOTOR VEHICLE TITLE LOAN. (a) |
|
The principal amount of a cash advance made under an extension of |
|
consumer credit in the form of a single-payment motor vehicle title |
|
loan that a credit access business obtains for a consumer or assists |
|
a consumer in obtaining may not exceed the lesser of: |
|
(1) three percent of the consumer's gross annual |
|
income; or |
|
(2) 70 percent of the retail value of the motor vehicle |
|
securing the debt. |
|
(b) The term of an original or refinanced extension of |
|
consumer credit in the form of a single-payment motor vehicle title |
|
loan that a credit access business obtains for a consumer or assists |
|
a consumer in obtaining may not be less than 30 days. |
|
(c) An extension of consumer credit in the form of a |
|
single-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
may not be refinanced more than three times. |
|
(d) Beginning with the first refinance and at each |
|
successive refinance after the first refinance, the minimum |
|
required payment or finance charge must reduce the principal |
|
balance by at least 10 percent of the original principal balance of |
|
the motor vehicle title loan. |
|
(e) If a consumer has refinanced a single-payment motor |
|
vehicle title loan described by Subsection (c) three times: |
|
(1) the credit access business must offer an extended |
|
payment plan to the consumer before initiating any activities to |
|
repossess the vehicle securing the debt; and |
|
(2) the consumer may request an extended payment plan |
|
at any time on or after the date the consumer refinances the motor |
|
vehicle title loan for the third time and on or before the date the |
|
motor vehicle title loan must be repaid in full. |
|
(f) A motor vehicle title loan may provide for a finance |
|
charge that does not exceed in the aggregate: |
|
(1) 20 percent a month on the portion of the cash |
|
advance that does not exceed $700; |
|
(2) 18 percent a month on the portion of the cash |
|
advance that is greater than $700 but does not exceed $1,400; and |
|
(3) 15 percent a month on the portion of the cash |
|
advance that is greater than $1,400. |
|
(g) An extended payment plan authorized by Subsection (d) |
|
must comply with Section 393.638. |
|
Sec. 393.637. MULTIPLE-PAYMENT MOTOR VEHICLE TITLE LOAN. |
|
(a) The principal amount of a cash advance made under an extension |
|
of consumer credit in the form of a multiple-payment motor vehicle |
|
title loan that a credit access business obtains for a consumer or |
|
assists a consumer in obtaining may not exceed 70 percent of the |
|
retail value of the motor vehicle securing the debt. |
|
(b) A scheduled payment under a contract for an extension of |
|
consumer credit in the form of a multiple-payment motor vehicle |
|
title loan that a credit access business obtains for a consumer or |
|
assists a consumer in obtaining may not exceed: |
|
(1) 15 percent of the consumer's gross monthly income, |
|
if the consumer's annual income is not more than 125 percent of the |
|
federal poverty level for a family of four; or |
|
(2) 20 percent of the consumer's gross monthly income, |
|
if the consumer is not described by Subdivision (1) and is not a |
|
military borrower to whom a different limit applies under federal |
|
law. |
|
(c) An extension of consumer credit in the form of a |
|
multiple-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
must be payable on a fully amortizing, declining principal balance |
|
basis with substantially equal payments. |
|
(d) An extension of consumer credit in the form of a |
|
multiple-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
may not be payable by the consumer in more than six installments, |
|
and the loan agreement must specify the number, date, and total |
|
amount due with regard to each installment. |
|
(e) The first installment of an extension of consumer credit |
|
in the form of a multiple-payment motor vehicle title loan that a |
|
credit access business obtains for a consumer or assists a consumer |
|
in obtaining may not be due before the 10th day after the date the |
|
consumer enters into the loan agreement. A subsequent installment |
|
may not be due before the 30th day after the date the previous |
|
installment of the loan is due. |
|
(f) An extension of consumer credit in the form of a |
|
multiple-payment motor vehicle title loan that a credit access |
|
business obtains for a consumer or assists a consumer in obtaining |
|
may not be refinanced. |
|
(g) A credit access business may not initiate any activities |
|
to repossess the vehicle securing the debt under a multiple-payment |
|
motor vehicle title loan that a credit access business obtains for a |
|
consumer or assists a consumer in obtaining before offering the |
|
consumer an extended payment plan. An extended payment plan |
|
authorized by this subsection must comply with Section 393.638. |
|
Sec. 393.638. EXTENDED PAYMENT PLAN REQUIREMENTS. (a) |
|
This section applies to extended payment plans permitted under |
|
Sections 393.634, 393.636, and 393.637. |
|
(b) An extended payment plan must provide for payment in at |
|
least: |
|
(1) four substantially equal installments, after |
|
which the outstanding balance will be paid in full, with respect to |
|
a single-payment deferred presentment transaction or |
|
single-payment motor vehicle title loan; or |
|
(2) two additional substantially equal installments, |
|
after which the outstanding balance, including only the fees and |
|
interest that would have been due under the original extension of |
|
consumer credit, will be paid in full, with respect to a |
|
multiple-payment motor vehicle title loan. |
|
(c) The period between installment payments on an extended |
|
payment plan may not be shorter than: |
|
(1) the term of the original extension of credit, with |
|
respect to a single-payment deferred presentment transaction; or |
|
(2) 30 days, with respect to a single-payment or |
|
multiple-payment motor vehicle title loan. |
|
(d) The first payment owed under an extended payment plan |
|
may not be due before the 10th day after the date the consumer |
|
requests an extended payment plan. |
|
(e) A credit access business may not assess additional fees |
|
or interest or assist a consumer in obtaining additional extensions |
|
of consumer credit if the consumer is paying an extension of credit |
|
under an extended payment plan. |
|
(f) A consumer may pay in full a debt subject to an extended |
|
payment plan at any time without prepayment penalties. |
|
(g) A person may not engage in debt collection or vehicle |
|
repossession activities for a debt subject to an extended payment |
|
plan if the consumer is in compliance with the extended payment |
|
plan. |
|
Sec. 393.639. RULES. The finance commission may adopt any |
|
rules necessary to implement Sections 393.629, 393.630, 393.631, |
|
393.632, 393.634, 393.635, 393.636, 393.637 and 393.638. |
|
SECTION 18. Sections 393.601(3) and (5), Finance Code, are |
|
repealed. |
|
SECTION 19. The consumer credit commissioner shall prepare |
|
and publish a report not later than December 1, 2014, regarding the |
|
need for comprehensive data reporting and the value and feasibility |
|
of a real-time statewide database system to provide data for policy |
|
development and to enhance the evaluation of a borrower's ability |
|
to repay a deferred presentment transaction or motor vehicle title |
|
loan. In reviewing the value and feasibility of a real-time |
|
statewide database system, as part of the study, the commissioner |
|
should consider the use of a database verification fee collected |
|
from the borrower to recover the actual costs of the system. |
|
SECTION 20. The changes in law made by this Act apply only |
|
to an extension of credit made on or after the effective date of |
|
this Act. An extension of credit made before the effective date of |
|
this Act is governed by the law in effect on the date the extension |
|
of credit was made, and the former law is continued in effect for |
|
that purpose. |
|
SECTION 21. This Act takes effect September 1, 2013. |