81R1037 CLG-F
By: Farias H.B. No. 2408
A BILL TO BE ENTITLED
AN ACT
relating to the extension of consumer credit to certain members of
the Texas National Guard and armed forces of the United States and
their dependents; providing a penalty.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle B, Title 4, Finance Code, is amended by
adding Chapter 353 to read as follows:
CHAPTER 353. EXTENSION OF CONSUMER CREDIT TO SERVICEMEMBERS OR
THEIR DEPENDENTS
Sec. 353.001. DEFINITIONS. In this chapter:
(1) "Creditor" means a person who:
(A) is engaged in the business of extending
consumer credit; or
(B) transacts, negotiates, or services an
extension of consumer credit.
(2) "Dependent," with respect to a servicemember,
means the servicemember's spouse or dependent child.
(3) "Dependent child" means a person who is unmarried
and who:
(A) is under 18 years of age;
(B) before the person's 18th birthday, became
permanently incapable of self-support; or
(C) is under 23 years of age and is pursuing a
course of instruction at an approved educational institution.
(4) "Extension of consumer credit" means the right to
defer payment of debt offered or granted primarily for personal,
family, or household purposes or to incur the debt and defer its
payment.
(5) "Servicemember" means a member of the United
States armed forces or a member of the Texas National Guard called
to federal active duty.
Sec. 353.002. INAPPLICABILITY OF CHAPTER. This chapter
does not apply to:
(1) an insured depository institution, as that term is
defined by Section 3, Federal Deposit Insurance Act (12 U.S.C.
Section 1813); or
(2) an insured credit union, as that term is defined by
Section 101, Federal Credit Union Act (12 U.S.C. Section 1752).
Sec. 353.003. INTEREST. (a) In this section, "interest"
includes a service charge, renewal charge, fee, and any other
charge, except a charge for bona fide insurance, with respect to the
extension of consumer credit.
(b) A creditor who extends consumer credit to a
servicemember or a servicemember's dependent may not, with respect
to the transaction, require the servicemember or dependent to pay
interest that is:
(1) not agreed to by the parties under the terms of the
agreement or promissory note; or
(2) specifically prohibited by this chapter or other
law.
Sec. 353.004. MAXIMUM ANNUAL PERCENTAGE RATE. A creditor
may not impose an annual percentage rate that exceeds 36 percent
with respect to an extension of consumer credit to a servicemember
or a servicemember's dependent.
Sec. 353.005. INFORMATION REQUIRED. (a) Before finalizing
an extension of consumer credit to a servicemember or a
servicemember's dependent, a creditor must provide the
servicemember or dependent with the following written information:
(1) a statement of the annual percentage rate
applicable to the extension of credit;
(2) all disclosures required to be made under the
Truth in Lending Act (15 U.S.C. Section 1601 et seq.); and
(3) a clear description of the payment obligations of
the servicemember or dependent.
(b) Before finalizing an extension of consumer credit, a
creditor must provide a written form, to be signed by the
individual, stating whether or not the individual who is the
subject of the extension of credit is a servicemember, a
servicemember's spouse, or a servicemember's dependent child.
Sec. 353.006. RENEWAL, REFINANCING, OR CONSOLIDATION OF
CREDIT. A creditor may not renew, repay, or refinance consumer
credit extended to a servicemember or a servicemember's dependent,
or consolidate any part of the proceeds of the extension of credit
with proceeds from any other extension of credit to that person by
the creditor, unless the creditor:
(1) executes new loan documentation that is signed by
the servicemember or dependent; and
(2) provides the information required by Section
353.005(a).
Sec. 353.007. CRIMINAL PENALTY. A creditor who knowingly
violates this chapter commits an offense. An offense under this
section is a Class A misdemeanor.
Sec. 353.008. REMEDIES AND ADDITIONAL PENALTIES. (a) The
remedies and rights available under this chapter are in addition to
and do not preclude any remedy otherwise available under law to a
servicemember or a servicemember's dependents, including any award
for consequential or punitive damages.
(b) On violation of this chapter, a creditor is subject to
all remedies and penalties authorized by Chapter 14.
SECTION 2. Chapter 353, Finance Code, as added by this Act,
applies only to an extension of consumer credit made on or after the
effective date of this Act. An extension of consumer credit made
before the effective date of this Act is governed by the law in
effect on the date the extension of consumer credit was made, and
the former law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2009.