Relating to the requirements for certain extensions of credit to consumers.
Impact
One notable provision of the bill is the requirement that lenders must consider a borrower's ability to repay when extending auto title loans. This is significant as it aims to curb predatory lending practices that can lead to a cycle of debt for consumers. The law sets a maximum cash advance that a lender can provide, limited to 35% of the borrower's gross monthly income, which is intended to ensure loans are manageable and reduce the risk of default.
Summary
House Bill 3786 seeks to amend the Finance Code of Texas by implementing regulations on consumer credit extensions and specifically addressing auto title loans. It introduces a prohibition on charging third-party fees related to the arrangement of certain consumer credit extensions if such loans are secured by non-purchase money security interests in personal property or are unsecured. The intention is to provide clearer protections for consumers when negotiating credit terms and to avoid additional financial burdens imposed by third parties.
Sentiment
The sentiment around HB3786 appears to be supportive among consumer advocacy groups and some legislators who view it as a necessary step forward for consumer protection in the financial realm. However, there may be concerns among lenders regarding the limitations placed on them, particularly with the new requirements for assessing repayment capability and the restrictions on fees, which they may see as overly burdensome.
Contention
Discussions surrounding HB3786 have highlighted potential conflicts over the balance of consumer protection versus lender flexibility. Some stakeholders argue that these regulations could restrict access to credit for consumers who may need it most, particularly those with lower incomes or poor credit histories. Additionally, the enforcement of penalties for non-compliance and the overall administrative burden on lenders were points of contention during deliberations.
Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.
Relating to a restriction on total charges charged for certain extensions of consumer credit that are facilitated by credit access businesses and entered into by consumers residing in disaster areas.
Relating to a restriction on total charges charged for extensions of consumer credit that a credit services organization obtains for a consumer or assists a consumer in obtaining.
Proposing a constitutional amendment authorizing the legislature to provide for exceptions to the requirement that a home equity loan be closed only at the office of the lender, an attorney at law, or a title company.
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.
Relating to the regulation of certain transactions and activities involving the provision of veterinary services; authorizing civil penalties; creating criminal offenses.
Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.
Relating to extensions of consumer credit in the form of a deferred presentment transaction that a credit access business obtains for a consumer or assists a consumer in obtaining; providing a civil penalty; adding a provision subject to a criminal penalty.
Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.
Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.
Relating to credit services organizations and extensions of consumer credit facilitated by credit services organizations; increasing a criminal penalty.