By: Flynn H.B. No. 2166
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to certain extensions of consumer credit facilitated by
  credit access businesses; providing a civil penalty.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Subchapter C, Chapter 393, Section 201, Finance
  Code, is amended by adding Subsections (d) and (e) to read as
  follows:
         (d)  A deferred presentment transaction, as defined by
  Section 393.601, for the performance of services described by
  Section 393.602(a)(1) must comply with the following terms.
               (1)  The proceeds given to a consumer in connection
  with a deferred presentment transaction extended to the consumer
  may not exceed:
                     (A)  35 percent of the consumer's gross monthly
  income for a single payment transaction; and
                     (B)  25 percent of the consumer’s gross monthly
  income for a scheduled payment on a multiple payment transaction.  
  The term of a single payment transaction may not exceed 30 days. In
  determining a consumer’s gross monthly income, a credit access
  business may utilize payroll documents, checks, bank statements and
  reports from nationally or regionally recognized credit and data
  reporting companies, and may rely on the representations of a
  consumer to form a reasonable belief about the consumer’s gross
  monthly income.
               (2)  A consumer who is unable to fully repay the fourth
  refinance of an initial single payment deferred presentment
  transaction may elect to repay the loan by means of an extended
  payment plan provided the consumer is not otherwise in default of
  such loan. For the purposes of this subsection, a “refinance” means
  any transaction a credit access business assists a consumer in
  obtaining that extends the repayment period of a then-outstanding
  deferred presentment transaction beyond its original term.  A
  refinance shall include both a traditional refinance that is
  evidenced by new written loan documents with new disclosures that
  satisfy and replace the prior loan documents, as well as a renewal
  of a single-payment transaction in which the term of the
  transaction is extended for an additional identical period.  A
  refinance shall not include a workout agreement.  "Refinance"
  includes the terms "renewal" and "rollover."
                     (A)  At every licensed location, a credit access
  business must notify a consumer of the consumer’s right to an
  extended payment plan by posting the following notice in a
  conspicuous location visible to the general public: "If you are
  unable to repay your transaction when due, you may be eligible for
  an extended payment plan.  You are eligible for an extended payment
  plan if you have refinanced your initial transaction four times.  
  You are eligible for an extended payment plan at least once in any
  12 month period.  If you meet the requirements for an extended
  payment plan, we will offer you a plan before the due date of your
  existing transaction.  To accept our offer of an extended payment
  plan, you must sign a written agreement that describes the terms of
  the plan before the due date of your exiting transaction."  The
  notice shall also be included, in at least 12-point bold type, on
  the first page of a contract with a credit access business.
                     (B)  An extended payment shall comply with the
  following:
                           (i)  A credit access business must offer to
  assist an eligible consumer, as described in (d)(2) of this
  subsection, in obtaining an extended payment plan at least once
  every 12 months.  The 12 month period is measured from the date of
  such extended payment plan.
                           (ii)  A credit access business must offer a
  consumer an extended payment plan before the due date of the fourth
  refinance of the outstanding transaction.
                           (iii)  A credit access business may not
  charge the consumer additional fees during an extended payment
  plan.
                           (iv)  A consumer must sign a written
  agreement that describes the terms of the extended payment plan.
                           (v)  An extended payment plan must allow a
  consumer to repay all outstanding amounts owing at the time such
  extended payment plan is offered in at least four substantially
  equal payments.
                           (vi)  A consumer may prepay an extended
  payment plan in full at any time without penalty.
                     (C)  If a consumer continues to make timely
  payments pursuant to an extended payment plan, a credit access
  business is prohibited from:
                           (i)  engaging in collection activities with
  respect to such deferred presentment transaction; and
                           (ii)  obtaining, or assisting the consumer
  in obtaining, additional deferred presentment transactions.
               
               (3)  A multiple payment deferred presentment
  transaction shall be payable on a fully-amortizing, declining
  principal balance basis with substantially equal payments as agreed
  upon by the parties.  Fees may be pre-computed or charged on a daily
  accrual method.  If fees are pre-computed, a credit access business
  shall refund unearned fees calculated on an actuarial basis upon
  the prepayment in full of a deferred presentment transaction.  A
  multiple payment deferred presentment transaction may not exceed
  180 days.
         (e)  A motor vehicle title loan, as defined by Section
  393.601, for the performance of services described by Section
  393.602(a)(2), must comply with the following terms.
               (1)  The proceeds given to a consumer in connection
  with a a motor vehicle title loan given to the consumer may not
  exceed the lesser of:
                     (A)  7 percent of the consumer’s gross monthly
  income for a single payment loan;
                     (B)  30 percent of the consumer’s gross monthly
  income for a scheduled payment on a multiple payment loan; or
                     (C)  70 percent of the retail value of the motor
  vehicle as determined pursuant to this subsection.
  The term of a single payment loan may not exceed 30 days and the term
  of a multiple-payment loan shall not exceed 365 days.  The retail
  value of a motor vehicle shall be based upon nationally or
  regionally recognized motor-vehicle appraisal guides if the
  vehicle is listed in such guides.  If a value for the motor vehicle
  is not listed in such guides, then the credit access business and
  the consumer shall agree in good faith on an appropriate retail
  value for the vehicle using generally available information
  relating to such motor vehicle.  In determining a consumer's gross
  monthly income, a credit access business may utilize payroll
  documents, checks, bank statements and reports from nationally or
  regionally recognized credit and data reporting companies, and may
  rely on the representations of a consumer to form a reasonable
  belief about the consumer’s gross monthly income.
               (2)  A consumer who is unable to fully repay the eighth
  refinance of an initial single payment motor vehicle title loan may
  elect to repay the loan by means of an extended payment plan
  provided the consumer is not otherwise in default of such loan.  For
  the purposes of this subsection, a "refinance" means any
  transaction a credit access business assists a consumer in
  obtaining that extends the repayment period of a then-outstanding
  motor vehicle title loan beyond its original term.  A refinance
  shall include both a traditional refinance that is evidenced by new
  written loan documents with new disclosures that satisfy and
  replace the prior loan documents, as well as a renewal of a
  single-payment loan in which the term of the loan is extended for an
  additional identical period.  A refinance shall not include a
  workout agreement.  "Refinance" includes the terms "renewal" and
  "rollover."
                     (A)  At every licensed location, a credit access
  business must notify a consumer of the consumer’s right to an
  extended payment plan by posting the following notice in a
  conspicuous location visible to the general public: "If you are
  unable to repay your loan when due, you may be eligible for an
  extended payment plan.  You are eligible for an extended payment
  plan if you have refinanced your initial loan eight times. You are
  eligible for an extended payment plan at least once in any 12 month
  period.  If you meet the requirements for an extended payment plan,
  we will offer you a plan before the due date of your existing loan.
  To accept our offer of an extended payment plan, you must sign a
  written agreement that describes the terms of the plan before the
  due date of your exiting loan."  The notice shall also be included,
  in at least 12-point bold type, on the first page of a contract with
  a credit access business.
                     (B)  An extended payment shall comply with the
  following:
                           (i)  A credit access business must offer to
  assist an eligible consumer, as described in (e)(2) of this
  subsection, in obtaining an extended payment plan at least once
  every 12 months. The 12 month period is measured from the date of
  such extended payment plan.
                           (ii)  A credit access business must offer a
  consumer an extended payment plan before the due date of the eighth
  refinance of the outstanding loan.
                           (iii)  A credit access business may not
  charge the consumer additional fees during an extended payment
  plan.
                           (iv)  A consumer must sign a written
  agreement that describes the terms of the extended payment plan.
                           (v)  An extended payment plan must allow a
  consumer to repay all outstanding amounts owing in at least four
  substantially equal payments.
                           (vi)  A consumer may prepay an extended
  payment plan in full at any time without penalty.
                     (C)  If a consumer continues to make timely
  payments pursuant to an extended payment plan, a credit access
  business is prohibited from:
                           (i)  engaging in collection activities with
  respect to such motor vehicle title loan; and
                           (ii)  obtaining, or assisting the consumer
  in obtaining, additional motor vehicle title loans.
               (3)  A multiple payment motor vehicle title loan shall
  be payable on a fully-amortizing, declining principal balance basis
  with substantially equal payments as agreed upon by the parties.  
  Fees may be pre-computed or charged on a daily accrual method.  If
  fees are pre-computed, a credit access business shall refund
  unearned fees calculated on an actuarial basis upon the prepayment
  in full of a motor vehicle title loan.
               (4)  Notwithstanding other law to the contrary, a motor
  vehicle title loan must provide that, except for fraud or other
  misconduct, including without limitation creating or not
  disclosing additional liens, or intentionally concealing or
  damaging the motor vehicle, the consumer shall have no personal
  liability with respect to the amount owed pursuant to either the
  motor vehicle title loan agreement or credit access agreement or
  any deficiency resulting from foreclosure against the motor vehicle
  pledged by the consumer.